By Jill Murray
Last week on 5 July 2017 the Fair Work Commission (FWC) handed down a significant decision in relation to casual work. (FWC  FWCFB 3541) This blog looks at the ramifications of one aspect of the decision, the ‘casual conversion’ issue.
What was the decision?
The FWC has agreed to an ACTU claim to insert into all awards a provision allowing casuals who work a regular pattern of hours over at least 12 months may, if they wish, request that their employer convert the position to permanent part-time or full-time. The employer is permitted to refuse a request if it would entail a change in hours, or if the regular pattern is not ongoing or on some other reasonable grounds. Disputes about an employer’s refusal will be dealt with under the award dispute resolution provision, which means the FWC may play a role. In addition, employers will be required to notify their casual employees of the terms of the new provision.
The final terms of the new common award provision will be the subject of further hearings before the Commission.
Will lots of casual workers gain permanency?
This is unlikely for a few reasons: only casuals who have worked a regular pattern of hours over twelve months are eligible, and there are ample grounds for an employer to reject the request. Many casual workers may prefer to remain casual, and receive the casual loading on top of their base pay, in which case they will not seek permanency. And any process of individual worker request for an entitlement is necessarily difficult because of the personal and power relations at play in the employment relationship. In particular, casual workers are legally vulnerable to changes in their working hours or a cessation of their engagement altogether.
Any such actions by an employer would breach the Fair Work Act’s adverse action provisions, which protect workers who seek to exercise an employment right. However, not every worker is aware of this protection and has the confidence or resources to resist the unlawful actions of an employer.
So why does the decision matter?
Despite these limitations, I still think the decision represents an important development in Australian statutory labour law. I discuss some reasons below.
A regulatory limit to unfettered ‘faux’ casualisation
It is significant that the FWC accepted detailed evidence about the problems with casual work and decided that its obligations under the Act required it to act by creating a new general rule about conversion. In other words, the FWC has added to the architecture of labour regulation generally in order to inject some measure of protection for casual workers in Australia. As one in four or five jobs in Australia is casual, any shift in the rights and entitlements of those workers is important.
This becomes clear if we imagine the FWC rejecting the ACTU case in toto. Symbolically, this would have meant that there was no independent institutional recognition of the regulatory failures of the existing legal framework. Strong evidence was presented to the FWC of the existence of the oxymoronic ‘permanent casual’, where a significant group of workers are labelled casual, with the consequent loss of employment protections, yet work with regular patterns of hours and days over long periods, even years.
An acknowledgement of the true disabilities of casual work
Casual workers receive a loading (eg 25% of the base rate of pay) designed to compensate for the absence of paid annual, sick leave and other entitlements which form the floor of working conditions for those workers who are permanent part-time or full-time. But the FWC noted that the concept of the leave loading did not capture all the disabilities associated with the reality of casual work: it held that the loading did not cover attending work while sick, inability to balance work and family, not taking leave for fear position would be lost, being subject to workplace changes without notice, lack of career path, diminished access to training and workplace participation, poor health and safety outcomes and the inability to obtain loans from financial institutions.
The integrity of the Fair Work system
The Fair Work Act creates a multi-layered system for setting working conditions. The Act itself contains legislated standards (annual leave and personal leave, parental leave and so on) in the National Employment Standards. Importantly, workers employed as casuals do not have the benefit of most of the legal protections of the National Employment Standards. A second level of regulation is established through the so-called Modern Awards which set more detailed conditions and processes for workers in particular industries or occupations.
The third level is the system of enterprise bargaining under the Act, which permits changes in award conditions (up or down) provided workers end up better off over all than the underpinning award.
The Fair Work system creates rules about how these levels interact. The National Employment Standards are non-derogable – no award or agreement can set standards lowers than those in the Act, although workers badged as casuals are generally excluded from the operation of this part of the Act. Award conditions can be reduced through bargaining provided there is an offsetting increase in entitlements and so.
The Fair Work Act contains a provision for regular reviews of the award level of regulation. When Parliament established the Four Yearly Review of Awards it charged the FWC with ensuring that the safety net of conditions was ‘fair and relevant’. What is remarkable about the casual conversion decision is that despite its focus on awards, it was a concern about the efficacy of the legislated standards – the National Employment Standards – which lies at the heart of the decision:
[Under the current system] ‘the employer…notionally has the capacity to deny NES entitlements to anybody it employs, regardless of the incidents of employment’ .
The FWC is charged by the Act with making ‘the safety net’ (ie the whole system of minimum working conditions) ‘fair and relevant’, and the FWC held that without some constraint employers could ‘render the National Employment Standards irrelevant to a significant proportion of the workforce’ simply by characterising those workers’ employment as casual. This meant that casuals who worked regular hours each day and week over long periods of time would, without intervention by the FWC, remain without annual leave or sick leave or right to notice of workplace change and other legal entitlements.
Conclusion: continuing dynamism in labour standards
The casual conversion mechanism may be a cautious, conservative intrusion into the unregulated use of casual employment in Australia, but it stands on this important principle: employers should not through their initial action in categorising work as casual be able to permanently exclude workers from their legal entitlements under the Act. The decision can be seen in the long line of national pay and conditions cases determined by the federal tribunal in all its guises: common features include lengthy, complex evidentiary arguments, a union claim vigorously contested by employers and other special interest lobbies, and a muted outcome which nonetheless takes the whole system of statutory labour regulation in Australia one step forward.