3.1
Evidence received by the committee identified a number of key issues relating to the drafting of the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 (the bill). These included:
the designation of a casual employee;
the treatment of pre-conversion service;
the interaction of the bill with enterprise agreements; and
the requirement for employers to provide all employees with updated copies of the Fair Work Information Statement.
3.2
This chapter will examine each of these issues in turn before presenting the committee's views and recommendation.
Designation of a 'casual' employee
3.3
Proposed section 66B of the bill would allow a casual employee to make a request to convert to full‑time or part-time employment. It sets out employee eligibility and formal requirements, and the types of employment to which an employee can request to convert.
3.4
Specifically, proposed subsection 66B(3) sets out when an employee is eligible to make a request under proposed subsection 66B(1):
An employee is covered by this subsection if:
(a) the employee is designated as a casual employee by the employer for the purposes of:
(i) any fair work instrument that applies to the employee;
or
(ii) the employee’s contract of employment; and
(b) the employee has, in the period of 12 months before giving the request to the employer, worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee (as the case may be).
3.5
Paragraphs 32 and 33 of the explanatory memorandum clarify the use and coverage of the term 'designated as a casual employee':
Generally it will be clear from an employee's written employment contract whether or not they have been designated as a casual by the employer. In cases where an employee does not have a written employment contract, other circumstances may indicate that the employee has been designated as a casual by their employer, for example a letter of offer of employment, what is recorded on their payslip, and if they are paid a casual loading.
The descriptor in paragraph 66B(3)(a) of an employee being designated as a casual is only relevant for the limited purpose of whether or not an employee is eligible to make a request for casual conversion under new Division 4A [requests for casual conversion], and in this way provides clarity and certainty of the new right. The descriptor does not affect, alter or have any application for any other references to a 'casual employee' in the NES [National Employment Standards], or the [Fair Work] Act more generally.
3.6
The Department of Jobs and Small Business (the department) provided further detail on the reason for the use of 'designated as a casual employee':
The eligibility criterion in the bill that an employee must have been 'designated' as a casual by their employer enables the right to apply to all people regarded as casuals by their employer. This is in line with the eligibility criterion of modern award-covered casuals who currently have the right to request conversion under awards that usually describe casuals as those 'engaged and paid as such'. The bill therefore gives the right to the broadest possible class of casuals. The descriptor is intended to provide employees with certainty as to whether they are eligible to make a request and ensure that all eligible casuals receive the new benefit.
3.7
The department reiterated that the wording of the provision would not impact the meaning or interpretation of 'casual employee' for other National Employment Standards (NES) purposes or the Fair Work Act 2009 (Fair Work Act) more broadly:
…the new right to request is 'ring-fenced' from other provisions in the Fair Work Act.
3.8
Ms Rachel Volzke, a Senior Executive Lawyer with the department further explained how the 'ring-fencing' of the definition would apply:
At paragraph 33 of the EM we [the department] make the point again that this [the definition] in no way has any effect on the broader meaning of 'casual employee' in the Fair Work Act, in the NES more broadly, outside of this right, or indeed in the common law. So, for those [other] purposes, the common law definition will continue to apply. The reason here to use that designation, as I said, is to make sure that as many as people as possible are able to have access to the right in the national system, to ensure consistency in the safety net across everybody in the national system.
3.9
Ms Volzke also noted that the bill was drafted to be consistent with the wording of the Fair Work Commission (FWC) model clause:
The government's commitment, when it came out and said that it was going to legislate this into the Fair Work Act, was to mirror the Fair Work Commission's decision on this and the model clause, noting that there are always going to have to be some modifications to accommodate it in a statutory context. In terms of the content of it, it mirrors it [the model clause] as closely as possible.
3.10
Several submitters raised concerns with the way this element of the bill was drafted.
3.11
Professor Andrew Stewart, an employment law academic who submitted in a private capacity, observed that no definition of the word 'designated' was provided in the bill, and that none of the amendments purported to define the term 'casual'. He noted that the explanatory memorandum appeared to confirm that what mattered in regard to proposed subsection 66B(3) was how the employer treated the employee, not whether the employee was actually a casual for any other legal purposes.
3.12
Professor Stewart advised that this approach could 'create difficulties':
Firstly, it would seem to imply that an employee who is for other legal purposes a casual cannot request conversion if they have never been formally told they are a casual or paid a loading. Secondly, and more significantly in practice, it raises the possibility of an employee being eligible to request conversion when they are not truly a casual – or at least, not a casual for some or all purposes.
3.13
The Australian Council of Trade Unions (ACTU) argued there was a risk that the 'designated as a casual employee' wording could change the way in which the term 'casual employee' is interpreted in the Fair Work Act and undermine the Full Federal Court decision in WorkPac v Skene.
3.14
In WorkPac v Skene, Mr Paul Skene, a fly-in, fly-out worker in the mining industry who worked set rosters for two years, was found not to be a 'casual employee' for the purpose of section 86 of the Fair Work Act (which exempts such employees from the NES entitlement to annual leave). As a result, he was entitled to recover an amount in lieu of the untaken leave that should have been paid to him under subsection 90(2) of the Fair Work Act when his employment ended.
3.15
The ACTU argued that there was a risk that courts might interpret other parts of the Fair Work Act differently if it was amended by the bill to contemplate an employer's ability to designate an employee as 'casual' for the purpose of introducing a right to request conversion.
3.16
The ACTU recommended that a better approach would be to define casual employment for the purposes of the Fair Work Act in a way that is consistent with the Skene decision.
3.17
Other submitters argued that the use of the term 'designated as a casual' did not alter the definition of casual employment and did not represent an attempt to circumvent the effects of the WorkPac v Skene decision. For example, the Australian Chamber of Commerce and Industry (ACCI) emphasised that the use of the term was 'ring fenced'. It highlighted that this 'encircling of the definition' meant the term would be unable to alter the operation of the existing protections for casuals in other parts of the Fair Work Act.
3.18
Ms Tamsin Lawrence, Deputy Director of Workplace Relations for ACCI provided further observations on this matter during the public hearing:
The other suggestion that we read in the media was that, potentially, this was an attempt to get around WorkPac v Skene and take away people's rights. We like to point out, as we did in our submission, that constitutionally we don't think this is possible. The government is unable to acquire someone's property—in this case, a legal right to a workplace entitlement if they've been misclassified—on unjust terms. This bill itself could not take away someone's entitlements if they had been misclassified and the Federal Court found them to be so. We'd like to point out that, even if that is potentially the intention of the bill, it can't possibly be that in effect.
3.19
ACCI urged the committee to 'strongly reject' any attempts to change the current drafting of 'designated as a casual' in proposed subsection 66B(3).
3.20
The Australian Industry Group (Ai Group) stated that it did not have any concerns about the definition used in proposed subsection 66B(3). As Mr Stephen Smith, Head of National Workplace Relations Policy for Ai Group explained to the committee:
…all the definition in the bill does is define the cohort of employee that is entitled to request conversion. There needs to be a definition of whom that right is given to. It does only that. We're comfortable enough with what is written there. It's a practical, sensible definition.
3.21
The National Retail Association (NRA) also informed the committee that it did not believe the wording would undermine the WorkPac v Skene decision. It stated that in its view, the requirement for the employer to 'designate' the employee as a casual was a 'practical necessity' in order for the proposed provisions to operate effectively.
Treatment of pre-conversion service
3.22
Part 2 of Schedule 1 of the bill contains items that seek to amend a number of elements of the Fair Work Act, including to clarify how conversion to full-time or part-time employment affects eligibility for, and the calculation of, other NES entitlements. Several submitters drew attention to these items aimed at clarifying the treatment of an employee's pre-conversion service.
3.23
For example, items 8–14 provide for a series of amendments aimed at clarifying 'for the avoidance of doubt' that where an employee has previously worked as a casual employee, but subsequently becomes eligible under the NES for annual leave, paid personal/carer's leave, or notice of termination or redundancy pay, any previous service as a casual is not to be taken into account in calculating the quantum of their entitlements.
3.24
Professor Stewart stated that he considered items 8–14 in the bill appropriate, particularly in light of the conflicting (FWC) decisions in Unilever Australia Trading Limited v AMWU and AMWU v Donau Pty Ltd.
3.25
However, he indicated he was 'far less certain' about items 5–7 which concern two NES rights for which (unlike the matters in items 8–14) casuals are eligible; namely, the right to request a change in working arrangements and the right to take various forms of unpaid parental leave.
3.26
The ACTU highlighted that the treatment of converted employees' pre-conversion service and entitlements has been the subject of 'divergent' Fair Work Commission (FWC) decisions, also citing the decisions on Unilever Australia Trading Limited v AMWU and AMWU v Donau Pty Ltd.
3.27
The ACTU stated that in the AMWU v Donau Pty Ltd decision the FWC held that there was no reason to infer that the definition of 'service' and 'continuous service' in section 22 of the Fair Work Act contemplated excluding the pre‑conversion service of casual employees. The ACTU argued that the bill in its current form would reverse this position. It recommended that the bill be amended to ensure pre-conversion service counts for the purposes of all NES entitlements.
3.28
ACCI also referenced the conflicting case law arising out of the Unilever Australia Trading Limited v AMWU and AMWU v Donau Pty Ltd decisions and stated that the bill 'helpfully provides much needed certainty' as to the treatment of pre-conversion service.
3.29
ACCI informed the committee that in its view, the qualifications contained in items 5–14 were necessary to avoid perpetuating considerable confusion for both employers and employees:
…without this section of the bill, conflicting case law could have been interpreted as effectively allowing for the 'double-dipping' of some entitlements in circumstances where full-time or part-time employees had had a period of casual service prior to conversion and received casual loading in lieu of and in compensation for those entitlements. This section of the bill rightfully makes sure that this will not be the case moving forward.
3.30
Ai Group also referenced the need for clarity in light of the Unilever Australia Trading Limited v AMWU and AMWU v Donau Pty Ltd decisions, and stated that the bill 'sensibly achieves' this goal. Mr Smith explained:
We strongly support the provisions of the bill that make it clear that a casual who has converted to permanent employment is not entitled to have the period of casual service counted for the purposes of redundancy pay. That's obviously common sense, and it would be blatant double dipping to allow a casual who has converted to have the period of casual service counted for redundancy entitlements when they've been paid a 25 per cent loading for the potentially many years that they may have been a casual.
Interaction with enterprise agreements
3.31
A number of submitters expressed views on how the bill would interact with existing enterprise agreements.
3.32
The bill proposes the insertion of a new section into the Fair Work Act to require enterprise agreements to include a casual conversion term that meets certain requirements.
3.33
This proposed section 205A would have the effect of overriding existing casual conversion terms in enterprise agreements unless they are 'the same, or substantially the same' as any term in either an underpinning award or the new NES provisions, or are 'more beneficial on an overall basis' to the relevant employees.
3.34
Professor Stewart observed that the explanatory memorandum to the bill did not provide any guidance on how comparisons of whether a term was 'the same, or substantially the same', or 'more beneficial on an overall basis' were to be made. He commented:
It is easy to imagine very difficult questions arising. For example, if an agreement makes employees eligible to request conversion in something less than 12 months, but gives the employer broader grounds on which to refuse the request, is that more or less beneficial? How is one to be weighed against the other?
3.35
The Ai Group submitted that as currently drafted, the new section would 'inappropriately disturb' numerous existing casual conversion arrangements in enterprise agreements.
3.36
It stated that the bill fails to adequately account for circumstances where an enterprise agreement applies to employees who are covered by more than one modern award:
As currently drafted, s.205A(2) requires that if an enterprise agreement applies to employees covered by multiple modern awards, the agreement either must include multiple casual conversion provisions that are the same, or substantially the same, as the terms included in each relevant modern award or the agreement must include a term that is more beneficial, on an overall basis, than the terms in each modern award that covers the employees.
There are major differences in the casual conversion provisions in different awards, for example in the period which must be worked before the entitlement can be accessed (i.e. 6 or 12 months); in the patterns of work associated with eligibility; and in the procedures that must be followed by employers and employees. Numerous casual conversion provisions in awards are not amenable to direct comparison with conversion provisions in other awards or with the model clause. The conversion provisions in different awards cannot easily be compared in terms of greater or lesser degrees of benefit to an employee.
For businesses engaged in sectors that require the employment of workers covered by a significant number of modern awards, e.g. labour hire or facilities maintenance, the Bill would require enterprise agreements to either contain numerous separate casual conversion clauses or require the employer to perform the near impossible task of drafting a clause that is more beneficial ‘on an overall basis’ to the employees than the clauses in each relevant modern award.
3.37
To resolve this concern, the Ai Group recommended that proposed subparagraphs 205A(2)(a)(ii) and (2)(b)(ii) be amended to allow an enterprise agreement to include a casual conversion provision so long as it:
is more beneficial to award covered employees than the conversion provision in any modern award that covers any of the employees; or
is more than beneficial 'in an overall basis' to employees covered by any relevant modern award.
3.38
ACCI also raised concerns that the bill would disturb existing arrangements in enterprise agreements. It noted that proposed sections 205A and 43 would negatively impact on those employers and employees who have 'lawfully and legitimately' negotiated to remove casual conversion clauses from enterprise agreements in exchange for some other benefit or entitlement:
These negotiated agreements currently in operation have been approved by the FWC. It is therefore not reasonable for the bill to require employers to forgo an arrangement lawfully entered into with their employees by requiring them to reintroduce an entitlement to casual conversion without any right to recoup what they provided in exchange for its original removal.
3.39
To mitigate this concern, ACCI submitted that proposed sections 205A and 43 should be amended to provide that regardless of the terms of the casual conversion clauses in an existing agreement, these arrangements should not be disturbed until the enterprise agreement is either replaced or terminated during which time the bill would form part of the statutory matrix for the better off overall test (i.e. conversion clause would be required).
3.40
The NRA also emphasised that the bill would 'undermine the fundamental principles of enterprise bargaining'. It drew the committee's attention to the current 'paradigm' of enterprise bargaining in which the only 'non-negotiable' aspects of the bargaining process were that an enterprise agreement could not provide for lesser entitlements than the NES. It noted that under this paradigm a provision of an enterprise agreement could be lesser than provided for in a modern award so long as this was offset by a greater benefit elsewhere.
3.41
The NRA explained the negative impact the bill would have on this paradigm:
Subsection 205A(3) changes this paradigm by effectively according a particular provision of a modern award the same status as the National Employment Standards insofar as the enterprise agreement must provide for at least the same, or better, as that provision in the modern award.
In so doing, the bill if passed would set a dangerous precedent for parliamentary interference in the enterprise bargaining process, in which businesses must suffer the risk that previously bargained-away provisions of the modern award will be re-imposed upon them for political expedience.
3.42
The ACTU also had a view on proposed section 205A, noting that the 'substantially the same…or more beneficial' test would mean that enterprise agreements could contain conversion clauses that are somewhat less beneficial than the applicable modern award or statutory standard. As an alternative, it proposed that the relevant test be that enterprise agreements contain a conversion clause that is 'no less beneficial' on an overall basis to those employees.
Requirement to provide employees with updated copies of the Fair Work Information Statement
3.43
Proposed clause 42 of the bill specifies that employers must provide a copy of the Fair Work Information Statement (Information Statement) to relevant existing employees. As the explanatory memorandum set out:
New subclause 42(1) specifies that the clause applies to existing employees if, immediately after the commencement of the Fair Work Amendment (Right to Request Casual Conversion) Act 2019, an employee of the employer is designated as a casual for the purposes of any fair work instrument or contract of employment that applies to the employee, and new Division 4A [requests for casual conversion] applies to the employee (refer new section 66A).
New subclause 42(2) provides that an employer must, within 3 months after the day that Act commences, give each such employee an updated Fair Work Information Statement. This will be required even if an employee has already received a Fair Work Information Statement from their employer.
3.44
Industry stakeholders argued that this requirement constituted a regulatory burden for employers and emphasised that it was the role of the Government, in particular the Fair Work Ombudsman (FWO), to educate and ensure compliance with workplace laws.
3.45
For example, ACCI stated that in its view, requiring employers to re-issue the Information Statement was an 'unnecessary impost' on employers which had the potential to create confusion and increase the regulatory burden on lawfully operating employers. It further articulated:
The requirement under the bill for employers to re-issue the statement to current casual employees shifts the FWO's educative and compliance function onto employers, many of whom are small business owners who in many instances may need just as much, if not more assistance and guidance from the FWO on the application and effect of the bill.
3.46
ACCI recommended that the bill should be amended to remove the requirement in proposed clause 42 for employers to reissue the Information Statement to current casual employees.
3.47
The Housing Industry Association considered that the FWO's education function was 'already well equipped' to assist employees and employers in understanding the rights and obligations set out in the Fair Work Act. It recommended that should the bill proceed, it should be amended to delete clause 42.
3.48
The Ai Group also contended that it was 'not appropriate' to require employers to re-issue the updated Information Statement to existing employees:
Such a requirement would impose a significant regulatory burden on employers and would establish a problematic precedent for the future. The requirement is unusual given that previous amendments to the FW Act and updates to the FWIS [Fair Work Information Statement] have not been coupled with a similar requirement.
3.49
The department advised that the decision to require employers to re-issue the Information Statement was based on the Fair Work Commission's model conversion clause:
When the model clause took effect in October [2018], there was a requirement that the text of that new clause had to be provided to employees within three months. In translating that across to the statutory context and the FWIS, there have been adjustments to try and accommodate that and ensure that it's as seamless as possible. The first step is to identify whether or not someone's right to request casual conversion stems from an award term. If it doesn't, that would translate over to when they'd be able to access the statutory entitlement. Obviously the Fair Work Ombudsman would have a role in updating that information and, presumably, providing education around that, when this right is rolled out.
Committee view
3.50
The committee recognises that casual employment is a genuine and fulfilling choice for many Australians which allows them to balance work with other life priorities. It also allows workers to prioritise the casual loading over other entitlements such as paid leave.
3.51
The committee also understands that casual employment is also an important model for employers, particularly for small businesses which need flexibility to manage their workforce in order to adjust to fluctuating work patterns and to effectively compete in the market.
3.52
The committee views the bill as an effective and balanced 'gap-filler' that will ensure that all eligible employees have access to a protected safety-net right to request to move to full-time or part-time employment.
3.53
The committee is of the opinion that inserting a right to request casual conversion in the NES is a reasonable step to ensure that the broadest class of employees possible are able to make use of this right as a formal pathway to request to convert to full-time or part-time employment.
3.54
The committee notes that the bill has been drafted to mirror the Fair Work Commission's model clause to the greatest possible extent. Additionally, the committee considers it appropriate that the bill has been drafted to ensure that the new right to request is 'ring-fenced' from other provisions in the Fair Work Act, and as such will not affect, alter or have any application for any other references to a 'casual employee' in the NES or the Fair Work Act.
3.55
While the committee acknowledges the concerns raised by some employee and employer representatives, the committee is of the view that the bill strikes an appropriate balance to the introduction of a right to request casual conversion.
3.56
The committee recommends that the Senate pass the bill.
Senator Slade Brockman
Chair