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Fair Work Amendment (Right to Request Casual Conversion) Bill 2019



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ISSN 1328-8091

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BILLS DIGEST NO. 78, 2018-19 4 APRIL 2019

Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 Jaan Murphy and Karen Elphick Law and Bills Digest Section

Contents

The Bills Digest at a glance .............................................. 4

Purpose of the Bill ........................................................... 5

Structure of the Bill ......................................................... 5

Background ..................................................................... 5

Historical definition of casual employment ................ 5 Historical industrial approach to casual employment ................................................................ 5

Casual conversion clauses in awards .......................... 5

Legislative reforms and recent cases dealing with casual conversion clauses ........................................... 6

Committee consideration ................................................ 6

Senate Education and Employment Legislation Committee ................................................................... 6

Senate Standing Committee for the Scrutiny of Bills .............................................................................. 7

Policy position of non-government parties/independents...................................................... 7

Position of major interest groups..................................... 7

Trade union movement............................................... 7

Employer and industry associations ........................... 8

Other stakeholders ...................................................... 9

Financial implications .................................................... 10

Statement of Compatibility with Human Rights.............. 10

Parliamentary Joint Committee on Human Rights ... 10 Key issues and provisions .............................................. 10

Definition of casual employment and the Bill ........... 11

Date introduced: 13 February 2019

House: House of Representatives

Portfolio: Jobs and Small Business

Commencement: The day after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at April 2019.

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Current legal definition of casual employment ...... 11 Current industrial practice in relation to ‘casual’ employment ............................................................ 12

Divergence between legal definition of casual employment and current industrial practices ........ 12 Employees covered by the Bill .................................. 13

Issue: meaning of ‘covered’ in the Bill .................... 15

Issue: application to certain modern award covered employees ................................................. 15

Issue: consistency between casual conversion clauses in the Bill and modern awards.................... 15 Issue: application to certain enterprise agreement covered employees .............................. 16

When can an employee request casual conversion? ............................................................... 16

Issue: ‘designated as a casual employee by the employer’ ................................................................ 17

Proposed definition would undermine existing common law definition ......................................... 17

Proposed definition is ‘ring-fenced’ and would not undermine existing common law definition ... 18 Issue: pattern of hours ............................................ 20

Industry and employer associations ..................... 20 Trade unions .......................................................... 21

Other stakeholders ................................................ 22

Process and type of conversion request ................... 22 Full-time conversion request .................................. 22

Part-time conversion request ................................. 23

Issue: ambiguous meaning of ‘full-time’ and ‘part-time’ ............................................................... 23

Issue: length of service ............................................ 23

Obligation for employer to give employee a response .................................................................... 24

Issue: when can an employer refuse a casual conversion request? ................................................ 24

Issue: grounds for refusal ........................................ 25

When a request is granted ........................................ 26

When does the conversion take effect? ................. 27 Treatment of pre-conversion service ........................ 27

Case law on pre-conversion service under awards and enterprise agreements ........................ 27

Pre-conversion service and annual leave, personal leave and termination of employment .... 28 Annual leave .......................................................... 28

Personal/carer’s leave ........................................... 28

Notice of termination and redundancy pay .......... 28

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Requesting flexible working arrangements .......... 29 Unpaid parental leave ........................................... 29

Issue: does the Bill deal with pre-conversion service appropriately? ............................................. 29

Other rights and obligations ..................................... 30

Disputes about casual conversion requests .............. 31 When can the FWC deal with dispute about a casual conversion request? ..................................... 31

Issue: requirement to attempt workplace-level resolution of casual conversion disputes ................ 31 Issue: application of civil penalty provisions to employees ............................................................... 31

Issue: parties must agree to arbitration.................. 32 Issue: should determination of ‘reasonable grounds’ be subject to arbitration? ........................ 33

Enterprise agreements .............................................. 33

Complexity of applying the comparison test .......... 33 Retrospective effect on existing enterprise agreements ............................................................. 35

Issue: the Bill would undermine enterprise bargaining ................................................................ 36

Submissions to amend or remove proposed sections 205 and 43 ................................................. 36

Other provisions ........................................................... 37

Power of Fair Work Commission to resolve difficulties with enterprise agreements .................... 37 Providing employees with Fair Work Information Statements ................................................................ 37

Concluding comments ................................................... 38

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The Bills Digest at a glance

What the Bill does

• The Bill amends the National Employment Standards (NES) to provide employees with a right to request conversion from casual to full time or part time employment where the applicable modern award or enterprise agreement does not.

• The Bill requires that all enterprise agreements contain a casual conversion clause, and where an existing enterprise agreement does not contain one, deems it to include either the relevant modern award clause, or the NES clause (if the relevant award does not contain a casual conversion clause).

• The Bill sets out when a right to request casual conversion can be refused by an employer on ‘reasonable grounds’ and how disputes about casual conversion requests are to be dealt with by the Fair Work Commission (FWC).

Why the Bill has been introduced

• The FWC decided to include casual conversion clauses into most modern awards. The Bill has been introduced to ensure that all employees covered by the Fair Work Act 2009 have the same rights as employees covered by those modern awards.

Stakeholder concerns

• Some stakeholders are concerned that the ‘designated as a casual employee by the employer’ definition of casual employment proposed by the Bill for the purposes of making casual conversion requests will undermine the existing common law definition of casual employment.

• Some stakeholders are concerned that the retrospective inclusion of a casual conversion clause into existing enterprise agreements will inappropriately disturb existing agreements, undermine collective bargaining and introduce additional complexity in getting enterprise agreements approved.

• The Bill proposes that employers can refuse casual conversion requests on ‘reasonable grounds’. Some stakeholders are concerned that this, along with restricted access to arbitration by the FWC, will effectively render the casual conversion right meaningless. Other stakeholders are concerned that the FWC will be able to make findings as to whether reasons given by an employer are reasonable or not, and argue that such a power is inappropriate.

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Purpose of the Bill The purpose of the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 (the Bill) is to amend the Fair Work Act 2009 (the FW Act) to, in practical sense, replicate the decision of the Full Bench of the Fair Work Commission (FWC) in 4 yearly review of modern awards - Casual employment and Part-time employment1 by:

• inserting into the National Employment Standards (NES) a new right for eligible casual employees to request to convert to full-time or part-time employment (‘casual conversion request’) and

• by doing so, ensuring that the casual conversion request right applies not only to award-covered employees, but all other employees covered by the FW Act.

Structure of the Bill The Bill has one Schedule, divided into two parts. Part 1 contains the main amendments. Part 2 contains other related and consequential amendments.

Background As the Bill deals with casual conversion requests, the definition of casual employment and the history of casual conversion clauses in awards forms an essential background to the Bill’s proposed casual conversion regime.

Historical definition of casual employment The appropriate definition of casual employment has been a long-standing issue within the Australian industrial relations framework. Legislation does not provide a definition of casual employment of general application, and as a result courts apply the common law definition. The common law definition of casual employment is, in simple terms, employment where there is the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work.2

That definition has remained effectively unchanged for many decades (most recently reaffirmed in Workpac v Skene’)3 and is applied when interpreting disputes under the FW Act and related legislation.

Historical industrial approach to casual employment Despite the common law definition of casual employment being well-known and stable, many modern awards, enterprise agreements and employers frequently define casual employment as being where the employee is engaged and paid as a casual employee. This occurs even in circumstances where the employee works a pattern of regular and systemic hours over a long period of time, and where, from the circumstances it can be inferred that there is a mutual expectation of continuity of employment between the employee and employer.

Casual conversion clauses in awards Against this background, various attempts were made—with varying degrees of success—to include casual conversion clauses in awards. This was intended to provide a mechanism for

1. 4 yearly review of modern awards - Casual employment and Part-time employment [2017] FWCFB 3541. 2. Williams v MacMahon Mining Services Pty Ltd (2009) 231 FLR 59, [2009] FMCA 511; WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC 131 at [172]; Ryde-Eastwood Leagues Club Ltd v Taylor [1994] NSWIRComm 112; and Australian Municipal, Administrative, Clerical and Services Union v Auscript (1998) 43 AILR ¶3-756.

3. WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC 131.

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employees who were, as a matter of law, permanent employees but were employed on a casual basis, to convert their employment from casual to full time or part time.4

Legislative reforms and recent cases dealing with casual conversion clauses Following the Workchoices reforms, awards were prohibited from including a casual conversion term.5 This prohibition was removed following the introduction of the FW Act.

As part of the award modernisation process, the Australian Industrial Relations Commission (a precursor to the FWC) indicated that casual conversion provisions would be maintained in awards where they were an industry standard.6

In July 2017, as part of its four year review of modern awards, the FWC decided to include a casual conversion clause in 85 modern awards that did not already contain one.7 The award variation officially took effect on 1 October 2018.8

Following the FWC decision to introduce casual conversion clauses into most (but not all) modern awards, the Government announced it would introduce legislation to:

… ensure that all employees in the Fair Work system will have access to a protected right to request casual conversion, irrespective of whether their terms and conditions of employment are set by a modern award, enterprise agreement or any other arrangements. 9

The Bill gives effect to that announcement.

Committee consideration

Senate Education and Employment Legislation Committee The Bill was referred to the Senate Education and Employment Legislation Committee (the Committee) for inquiry and report by 26 March 2019. Details of the inquiry are at the Committee Inquiry homepage.

The majority report of the Committee noted the concerns ‘raised by some employee and employer representatives’ but concluded that the Bill in its current form ‘strikes an appropriate balance to the introduction of a right to request casual conversion’ and therefore recommended that the Bill be passed.10

The Australian Labor Party (ALP) Senators’ dissenting report concluded that ‘there are significant problems with the Bill as drafted’ and recommended that the Bill not be passed in its current form.11

4. See: Australian Chamber of Commerce and Industry (ACCI), Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], [Submission no. 11], February 2019, paras 25 and 26 for examples of early attempts to include casual conversion clauses in awards.

5. Workplace Relations Amendment (Work Choices) Act 2005 (Cth), section 116B. 6. Request from Minister for Employment and Workplace Relations - 28 March 2008 - Award Modernisation (2008) 177 IR 364, [2008] AIRCFB 1000. 7. 4 yearly review of modern awards - Casual employment and Part-time employment [2017] FWCFB 3541. 8. 4 yearly review of modern awards - Part-time employment and Casual employment [2018] FWCFB 4695. 9. K O’Dwyer (Minister for Jobs and Industrial Relations; Minister for Women), Giving choice and flexibility to casual workers,

media release, 13 February 2019. 10. Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 26 March 2019, p. 17. 11. Labor Senators, Dissenting report, Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], 26 March 2019, p. 22.

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The Australian Greens (the Greens) Senators’ dissenting report concluded ‘that the Bill as drafted undermines the rights of casual employees’ and therefore recommended that the Bill not be passed.12

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills had no comments on the Bill.13

Policy position of non-government parties/independents The ALP and the Greens have signalled their opposition to the Bill as drafted.14 At the time of writing, the position of other non-government parties and independents on the precise measures contained in the Bill could not be determined.

Position of major interest groups The position of major interest groups on the Bill as a whole varies considerably, as discussed below.

Trade union movement A number of trade unions made submissions or provided evidence to the Committee Inquiry. Generally, whilst supportive of the concept of casual conversion, the trade union movement was opposed to the Bill as drafted on the grounds that:

• the Bill inappropriately allows employers to ‘designate’ employees as casual, rather than using the long-established common law test (based on objective criteria) to determine their actual employment status15

• by allowing an employer to refuse a casual conversion request on ‘reasonable grounds’, the Bill effectively renders the right to request casual conversion powerless16

• the Bill would potentially expose employees to civil penalties if they fail to follow the correct dispute resolution process17 and

12. Australian Greens Senators’, Dissenting Report, Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 26 March 2019, p. 24. 13. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 2, 2019, The Senate, 28 March 2019, p. 75. 14. Labor Senators, Dissenting report, Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], 26 March 2019, p. 22; Australian Greens Senators, Dissenting report, Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 26 March 2019, p. 24. 15. See for example the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: the National Tertiary Education Union (NTEU)[Submission no. 15], 8 March 2019, p. 5; Australian Council of Trade Unions (ACTU), [Submission no. 3], March 2019, pp. 4, 6-8; T Roberts (Director of Industrial and Social Policy, ACTU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 15: ‘Proponents of the bill maintain that it will have no flow-on consequences because the concept of employer designation can be and is limited to the issue of casual conversion, even though the bill itself does not say so in express terms. We disagree. You need only consider the operation of the employer designation model here to appreciate the difficulties that will be created if this legislation passes.’; A Bukarcia (National Legal Director, Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU)), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 16: ‘The mere designation by an employer should not prevail over the actual nature of the employment relationship’ and p. 18: ‘…the way the bill allows an employer to designate undermines the scheme decision and I think perpetuates this falsehood that these employees are in fact casuals, when they're not.’ 16. See for example the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: the NTEU, op. cit., p. 6; Australian Manufacturing Workers’ Unions (AMWU), [Submission no. 5], 1 March 2019, pp. 1-2; J Fleming (Legal and Industrial Officer, ACTU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 19: ‘So, unless there is some objective restriction on the employer's right to refuse, it undermines the efficacy of the right. The problem with the formulation, as it is, is that it is not codified or significantly testable. It is an open-ended list. A right to covert would be preferable.’

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• the Bill deals inappropriately and unfairly with how pre-conversion service is to be counted (or not counted) towards various other NES entitlements (such as annual leave).18

Most prominently however, the trade unions’ main concern about the Bill was its alleged potential to undermine the decision in Workpac v Skene and the failure of the Bill to provide an appropriate definition of casual employment that reflected that decision and previous case-law.19 These issues are explored in more detail under the heading ‘Key issues and provisions’ below.

Employer and industry associations A number of employer groups and industry associations made submissions or provided evidence to the Committee Inquiry. Amongst those stakeholders, all recommended that the Bill be substantially amended.20 All the other employer and industry associations only offered conditional support for an amended version of the Bill.21 The key concerns of employer groups and industry associations included that:

• casual conversion is not always consistent with operating a business, and in particular, may impact on smaller businesses22

• the Bill:

- would ‘inappropriately disturb’ existing enterprise agreements and introduce additional complexity in having enterprise agreements approved by the FWC23 - did not exclude a consideration of ‘reasonable grounds’ from the FWC dispute resolution process24 - requires employers to provide all employees with a revised Fair Work Information Statement

(FWIS), and this is an ‘unnecessary impost on employers’25

17. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 4, 9-11; P Reilly (Industrial Officer, Victorian Branch, Australian Workers’ Union (AWU)), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 22: ‘In my experience it's not uncommon for individual employees to overlook preliminary steps in dispute settlement procedures. There is a situation contemplated by the bill where a layperson—someone who is not an experienced industrial relations practitioner—who as a first step seeks to refer a dispute to the Fair Work Commission would be subject to a civil penalty to the tune of $12,000. This seems an unnecessary and extremely punitive provision.’

18. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 4, 8-10. 19. Ibid., pp. 4, 6-8. 20. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2: ‘In light of the shift from arbitration to implementation the Australian Chamber is not opposed to attempts to improve consistency where appropriate between the award provisions which overall apply to about two thirds of employees (disproportionately in small businesses) and new NES entitlements. Nevertheless, the Australian Chamber has a number of suggested amendments to the Bill as introduced, to ensure that it meets the objectives of the Act, and the Australian Chamber urges the Committee to recommend such changes.’ 21. See for example the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment

(Right to Request Casual Conversion) Bill 2019 [Provisions] from: the National Retail Association (NRA), [Submission no. 7], 1 March 2019, p. 3: ‘Although supporting, in principle, the standardization of rights and obligations of employers and employees across the whole of Australia’s industrial relations framework, NRA cannot support the passage of the Bill in its current form.’; Australian Industry Group (AIG), [Submission no. 10], March 2019, p. 10: ‘Ai Group recommends that the Bill be amended to reflect the proposals in this submission’; Housing Industry Association (HIA) [Submission no. 12], 5 March 2019, p. 5: ‘In HIA’s view a case for the changes proposed by the Bill has not been made.’; APTIA, op. cit., p. 3: ‘APTIA supports the legislation but warns that it would be bad legislation that tried to create a ‘one size fits all’ category for casual employees and did not recognise that permanent casuals are a feature of the employment landscape. APTIA recommends that the Committee considers an amendment to section 66D(2)…’. 22. See for example the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment

(Right to Request Casual Conversion) Bill 2019 [Provisions] from: the ACCI, op. cit., p. 1; HIA, op. cit., pp. 4-5. 23. See for example the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: ACCI, op. cit., pp. 9-11; NRA, op. cit., pp. 10-12. 24. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7.

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- included inconsistent drafting and may result in interpretive issues in future litigation26 and - included an inappropriate ‘regular pattern of hours’ test.27 These issues are explored in more detail under the heading ‘Key issues and provisions’ below.

Other stakeholders A number of other stakeholders, including various employment-focused legal services, other community groups and academics made submissions or provided evidence to the Committee Inquiry. Positions on the Bill varied widely.

For example, the Isaac Regional Council (IRC), Job Watch Employment Rights Legal Centre (JWERLC) and Federation of Ethnic Communities’ Councils of Australia (FECCA) all supported the Bill.28

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) indicated that the Bill would have little impact on small business and failed to address a ‘key issue’ facing small business, namely ‘how the classification of workers across casual, part-time and full-time can be reflected in how they are employed on a day to day basis’.29

Professor Andrew Stewart from the Law School at the University of Adelaide recommended the Bill be withdrawn and re-drafted.30 The non-union and employer/industry association stakeholders raised a number of concerns including:

• the impact on ‘casualisation’ of the workforce on local government funding, on employees generally and the ‘ripple effect’ of casual work on populations31

• the requirement for an employer to agree to arbitration over any casual conversion disputes32

• potential application of conversion to fixed-term contract positions33

• the need to improve understanding by people from culturally and linguistically diverse (CALD) backgrounds of laws regarding the right to casual conversion and the general workplace rights of the individual34

• the treatment of pre-conversion service in relation to other NES entitlements (such as annual leave)35

25. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 12. 26. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 5-7. 27. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 7-9. 28. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: Job Watch Employment Rights Legal Centre (JWERLC), [Submission no.

1], n.d., p. 2; Isaac Regional Council (IRC), [Submission no. 14], 11 March 2019, p. 2; Federation of Ethnic Communities’ Councils of Australia (FECCA), [Submission no. 13], 12 March 2019, p. 1. 29. Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], [Submission no. 6],

27 February 2019, p. 1. 30. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], [Submission no. 9], n.d., p. 1. 31. IRC, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2. 32. JWERLC, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 3-4. 33. Ibid., pp. 4-5. 34. FECCA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 1-3.

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• potentially complicating the process for getting enterprise agreements approved36 and

• a failure to deal with the broader, long-standing and well-known issue of employees being treated by their employer as casual (sometimes for years) whilst not actually being a casual as a matter of law.37

These issues are explored in more detail under the heading ‘Key issues and provisions’ below.

Financial implications According to the Bill’s Explanatory Memorandum, the proposed amendments will have no financial impact on the Commonwealth.38 A number of stakeholder submissions drew attention to the potential financial implications of the Bill for businesses and employees.39

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.40

Parliamentary Joint Committee on Human Rights At the time of writing the Parliamentary Joint Committee on Human Rights had not yet considered the Bill.

Key issues and provisions Broadly speaking, the key issues relating to the Bill can be summarised as:

• its relationship to the issue of how to define casual employment generally

• the employees covered and when employees are entitled to request casual conversion

• obligations imposed on the employer and when they can refuse a casual conversion request

• how disputes about casual conversion requests are to be resolved

• how the Bill impacts on existing and future enterprise agreements

• the treatment of pre-conversion service in relation to NES entitlements and

• providing employees with Fair Work Information Statements (FWIS).

These are discussed below.

35. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: Young Workers Centre (YWC), [Submission no. 4], 1 March 2019, p. 2; A Stewart, op. cit., pp. 10-11.

36. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 9-10. 37. Ibid., p. 2-7. See p. 3: ‘The problem, however, which is far from new but has been known about for many years, is that an employee may be treated by their employer as a casual, yet not actually be a casual as a matter of law. Or they might be a

casual for some legal purposes, but not for others.’ and also p. 4: ‘To return then to the Bill, the first point to make is that it is extraordinary that, against the backdrop described above, the government has not taken the opportunity to provide clarity on this issue. It is crying out for a legislative fix. Reasonable minds will differ as to what that fix might be, but it seems to me to be impossible to argue that a fix is unnecessary.’ 38. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, p. vi. 39. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions] from: HIA, op. cit., p. 1; ACCI, op. cit., pp. 1-2. 40. The Statement of Compatibility with Human Rights can be found at page vii of the Explanatory Memorandum to the Bill.

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Definition of casual employment and the Bill A number of stakeholder submissions raised concerns about the Bill and its interaction with the existing case law regarding the definition of casual employment, including the recent Full Federal Court decision in Workpac v Skene.

Current legal definition of casual employment A long line of cases—going back to at least 1936—have considered how to define casual employment. The following principles are derived from those cases.

First, terms such as ‘casual worker’ are not precise legal terms but rather, ‘colloquial expressions’.41 This means that (absent a statutory definition) the true legal relationship between the parties cannot be determined simply by the description the parties gave to the relationship (for example, by the terms of a contract or by the terms of an enterprise agreement).42

Second, in the absence of a statutory definition of ‘casual’ worker, the facts of each arrangement need to be examined on a case by case basis in order to determine whether an employee is a ‘casual’.43 To determine the nature of the employment relationship, a number of indicia are applied including:

• the number of hours worked each week

• whether a roster system is published in advance

• whether the employment pattern is regular (the ‘regular and systemic’ aspect)

• whether the employee and employer have a mutual expectation of continuity of employment

• whether the employer requires notice before an employee is absent or on leave

• whether the employee has a reasonable expectation that work will be available and

• whether the employee works to consistent starting and finishing times.44

Third, definitions of casual employment in modern awards (or employment contracts or enterprise agreements) cannot override the common law definition of casual employment as:

It ought to be presumed that where Parliament is prepared to cede control over a significant definition used in the National Employment Standards to the FWC or to industrial parties making enterprise agreements, it would do so expressly. That is particularly so given the consequences which that course is likely to entail. Delegating to the FWC and to the makers of enterprise agreements the power to define who is a casual employee for the purposes of the National Employment Standards would likely result in a substantial differentiation in the accessibility of those Standards to some employees as opposed to others, despite the fact that the true nature of the employments of all is the same. Alternatively, it may

41. Doyle v Sydney Steel Co Ltd (1936) 56 CLR 545, [1936] HCA 66. 42. Williams v Macmahon Mining Services Pty Ltd (2009) 231 FLR 59, [2009] FMCA 511; WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC 131. 43. Doyle v Sydney Steel Co Ltd (1936) 56 CLR 545, [1936] HCA 66; WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC

131at [159]: ‘It may be accepted that the term “casual employee” has no precise meaning and that whether any particular employee is a casual employee depends upon an objective characterisation of the nature of the particular employment as a matter of fact and law having regard to all of the circumstances. That the expression lacks precise definition and that the shade of its colour is dependent upon context does not deny that the term has acquired a legal meaning, especially where the general law has laid down indicia by which the factual circumstances are to be assessed in the process of characterisation.’ 44. Licensed Clubs Association of Victoria v Higgins (1988) AILR ¶497, (1988) 4 VIR 43; Ransom v Arthur Anderson [1999] AIRC 403,

(1999) 45 AILR ¶4-063, the casual’s regular pattern of hours was taken into account. It was held that a casual filing clerk who had worked for the same employer for two years, originally for two days and during the latter part for four or five days, “presented for work on a regular basis as predetermined”. She could not be described as a “casual employee” but as “permanent part-time” or “virtually full-time”. See also: Metals and Engineering Workers Union — Western Australia v Centurion Industries Ltd (1996) 40 AILR ¶13-084 and Reed v Blue Line Cruises Ltd (1996) 73 IR 420; Williams v MacMahon Mining Services Pty Ltd (2010) 201 IR 123, [2010] FCA 1321 and WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC 131 at [173].

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result in the access of the same employees varying over time, as new enterprise agreements are made, despite the fact that the true nature of those employments has not altered. 45

Fourth, based on the above, casual employment is characterised as employment where there is the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work.46 In summary, case law provides that a casual employee is an employee who is employed to perform work:

• on an ‘as needs’ basis and

• without regularity to their pattern of work and

• without any guarantee that the employment relationship will be ongoing.47

Current industrial practice in relation to ‘casual’ employment In practice many modern awards and enterprise agreements ‘define a casual as anyone who is ‘engaged and paid’ as a casual’.48 The FWC has noted that as a matter of practice:

… most modern awards permit persons to be employed as casuals on the basis that they are engaged and paid as such - that is, casual employment for award purposes is usually no more than a method of payment selected by the employer and accepted by the employee at the point of engagement… the evidence of the practical position is overwhelmingly that persons engaged on a casual basis are not afforded the NES entitlements we have referred to, and are paid an award casual loading in lieu of these entitlements.

49 (emphasis added)

As noted by the Australian Public Transport Industrial Association (APTIA) ‘in a lot of cases casual employees receive regular and consistent work but either do not want or are not suitable for part time or permanent work’50 - arrangements labelled as ‘permanent casual’ or ‘long-term casual’ employment by some stakeholders.51

Divergence between legal definition of casual employment and current industrial practices From the above it is clear that the legal definition of casual employment has been known and remained stable for many years.52 In practice though, many people are engaged and paid as casuals by their employers, despite working stable patterns of employment (including from the moment they commence employment) often for many months or years. Professor Stewart noted:

45. WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC 131 at [123]. See also: Australian Municipal, Administrative, Clerical and Services Union v Auscript (1998) 83 IR 38; (1998) 43 AILR ¶3-756. 46. Williams v Macmahon Mining Services Pty Ltd (2009) 231 FLR 59, [2009] FMCA 511; WorkPac Pty Ltd v Skene (2018) 362 ALR 311, [2018] FCAFC 131 at [172]; Ryde-Eastwood Leagues Club Ltd v Taylor [1994] NSWIRComm 112 and Australian Municipal,

Administrative, Clerical and Services Union v Auscript (1998) 43 AILR ¶3-756. 47. CCH, Australian Labour Law Reporter: [¶1-151] What is a casual employee?, 6 April 2017. 48. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 3. 49. 4 yearly review of modern awards - Casual employment and Part-time employment [2017] FWCFB 3541 at [362]. 50. APTIA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2. 51. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: Professor Andrew Stewart, op. cit., p. 3; ACTU, op. cit., p. 8. See also:

B Smee, ‘Call for hybrid permanent-casual workers after landmark court case’, The Guardian Australia, 3 September 2018; R Owens, ‘The “long-term or permanent casual”- an oxymoron or “a well enough understood Australianism” in the law?’, Australian Bulletin of Labour, 27(2), June 2001, pp. 118-136. 52. Owens, ‘The “long-term or permanent casual”’, op. cit.; S Toomey, ‘Casual work gains momentum’, The Weekend Australian, 10 June 2000: ‘… the Australian definition of the casual worker as one not entitled to sick or holiday pay fails to create a necessary distinction between the “true casual” - one who works for a short period or on a short-term and irregular basis - and the “permanent” casual who may be used by an employer in much the same way as a permanent employee, although deprived by the casual status of standard rights benefits and entitlements generally associated with permanent status.’

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The problem, however, which is far from new but has been known about for many years, is that an employee may be treated by their employer as a casual, yet not actually be a casual as a matter of law. Or they might be a casual for some legal purposes, but not for others. 53

He noted further that in practice ‘there may be a very substantial number of employees, possibly over a million at any time, who are being wrongly treated as casuals’.54 This view was shared by the Australian Council of Trade Unions (ACTU). In contrast, whilst not disputing the validity of the data regarding how many casual employees worked regular shifts for six months or more for their employer, the Australian Industry Group (AIG) did not express an opinion as to how many of those casual employees could potentially be, as a matter of law, properly characterised as permanent employees.55

In summary, there is a long-standing, persistent divergence between the accepted common law understanding of what constitutes ‘casual employment’ and current industrial practices. The relationship between that divergence and the amendments in the Bill was a key issue raised by many stakeholders, with views as to appropriate responses varying as noted in the discussion below.

Employees covered by the Bill Employees covered by the Act • The FW Act is overwhelmingly concerned with, and regulates, the terms and conditions of employment (rather than ‘work’) for national system employees and employers.56 Therefore,

the definitions of national system employee and employer primarily determine the reach of the FW Act and hence the employees entitled to make casual conversion requests.

• Section 13 of the FW Act defines a national system employee as an individual employed, or usually employed, by a national system employer (other than on a vocational placement). Sections 30C and 30M of the FW Act provide that any other employee in a state that has referred the necessary powers to the Commonwealth (a ‘referral state’) will also be treated as a national system employee, to the extent that the relevant state legislation provides.

• Section 14 of the FW Act defines a national system employer as any of the following entities, so far as they employ, or usually employ, an individual: a constitutional corporation; the Commonwealth; a Commonwealth authority; those who employ flight crew officers, maritime employees or waterside workers in connection with constitutional trade or commerce; a body incorporated in a Territory; and any other person or entity that operates in a Territory. This definition is extended by sections 30D and 30N to cover any employer in a referringl state, to the extent that they employ an employee (or police officer, such as in Victoria) who falls within a reference of powers.

The effect of the above is that given that all of the states, except for Western Australia, have passed legislation referring industrial relations powers to the Commonwealth, the FW Act extends

53. Professor Andrew Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 3. 54. Ibid., p. 4. 55. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 5: ‘…the Full Bench cited the [Household Income and Labour Dynamics in Australia] HILDA survey as showing that about 60 per cent of casuals had worked regular shifts for six months or more with their current employer, and 28% of casuals had worked for their current employer for 3 years or more.’; T Roberts (Director of Industrial and Social Policy, ACTU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 15: ‘The permanent casual phenomenon is significant in scale. By one estimation, more than one million of the 2.7 million casual employees are now incorrectly classified as casuals and are in truth permanent employees.’ 56. Fair Work Act 2009, sections 12, 13, 14, 15, 30A, 30C, 30D and 30E.

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to most (but not all) employers and employees in Australia.

Item 2 of Part 1 of the Bill inserts proposed Division 4A—Requests for casual conversion into Part 2-2 of the FW Act, which deals with the National Employment Standards. Proposed Division 4A consists of proposed sections 66A to 66G. Proposed section 66A sets out which employees are covered by the proposed Division.

The provisions do not apply to all employees because, according to the Explanatory Memorandum, the right to request casual conversion in proposed Division 4A is intended to be a ‘gap filler’ where those rights do not already exist (for example, in a modern award or enterprise agreement).57

Proposed Division 4A of the FW Act will apply to all employees except those covered by:

• a modern award which includes a casual conversion term58 or

• an enterprise agreement which includes a casual conversion term.59

Item 1 of Part 1 inserts a definition of casual conversion term into section 12 of the FW Act: it means a term that has the effect of allowing for requests to be made to convert from casual employment to full-time or part-time employment. In practical terms this means that the Bill will cover:

• award-free employees

• employees covered by:

- a modern award that does not include a casual conversion term or - an enterprise agreement which does not includes a casual conversion term or includes a term that is not the same, substantially the same, or more beneficial (the comparison test) than the entitlement in proposed Division 4A.60 A number of stakeholders raised issues with the Bill covering employees covered by modern

awards and enterprise agreements that do not currently include a casual conversion term.61

In relation to employees covered by enterprise agreements, they are only excluded from proposed Division 4A if:

• the casual conversion term contained in the enterprise agreement is the same, substantially the same, or more beneficial (the comparison test) than the entitlement in proposed Division 4A or

57. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, p. 3. 58. FW Act, proposed subsections 66A(1) and (2). 59. FW Act, proposed subsections 66A(1) and (3). 60. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, pp. iv, 3. See also: FW Act,

note to proposed subsection 205A(3), at item 3 of Schedule 1 to the Bill. 61. Professor Andrew Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 8-9: ‘The effect of the Bill is that where a

modern award has no ‘casual conversion term’, a right to request conversion is created as part of the NES (see proposed s 66A). But this seems to ignore the possibility that the FWC may have decided that, for whatever reason, it is not appropriate for a particular award to have a casual conversion term. Where this is because the award in question does not allow for casual employment in any form, it seems unlikely that the NES right could in practice be activated. But it is also possible that the reason for the lack of any casual conversion right is because the award has other categories of employment, and a conversion right would either not be appropriate, or would need to operate in a different way.’; ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para 59: ‘These sections mean that the Bill will have the effect of disturbing existing arrangements in enterprise agreements that provide for casual conversion, as well as enterprise agreements that had previously negotiated for casual conversion rights to be traded away in exchange for other entitlements or benefits for employees.’

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• is, by virtue of proposed subsection 205A(3), deemed to contain the casual conversion term included in a modern award that applies to the employees covered by the enterprise agreement.62

Where this is the not the case - such as when:

• the enterprise agreement does not include a casual conversion term that meets the relevant requirements and

• applies to employees covered by a modern award that does not include a casual conversion term or

• applies or to employees not covered by a modern award at all

then the casual conversion right in proposed Division 4A applies. This means those employees will be able to request casual conversion under the terms proposed by the Bill.63

Issue: meaning of ‘covered’ in the Bill The National Retail Association (NRA) points out that ‘covers’ (and by extension ‘covered’) has a number of different meanings in different places in the Act. Section 12 of the FW Act already provides four specific definitions, but the Bill does not propose to amend section 12 to refer to the additional definition used in proposed section 66A. The NRA suggests this could lead to confusion in the interpretation of the word and therefore recommended that ‘additional amendments to the definition of “covers” in section 12 of the Act need to be made’ in order to facilitate consistent interpretation of the legislation.64

Issue: application to certain modern award covered employees As noted above, the Bill will apply to employees covered by modern awards that do not contain a casual conversion clause.65 Professor Stewart noted:

… this seems to ignore the possibility that the FWC may have decided that, for whatever reason, it is not appropriate for a particular award to have a casual conversion term … In my view, it would have made far more sense to require the FWC to consider whether to include conversion provisions in every current award, but then leave it to the tribunal to decide that. As it is, if it decides not to, the Bill proposes to ignore that view and impose a conversion process anyway.

66 (emphasis added)

Issue: consistency between casual conversion clauses in the Bill and modern awards Whenever a new employment standard is added to the NES, the change needs to be reflected in modern awards. In such cases, the FWC has generally required the award to be altered to refer to the NES rather than repeating the changed NES provisions in the award. This practice prevents the terms and conditions of employment in the award deviating from the NES in the future, and thus ensures consistency in employment conditions between the NES and award-covered employees.67

62. FW Act, proposed section 205A is inserted by item 3 in Part 1 of the Bill. 63. FW Act, note to proposed subsection 205A(3). 64. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para. 6.2.6.

65. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, pp. iii, 3. 66. Professor Andrew Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 8-9. 67. 4 yearly review of modern awards-Family and Domestic Violence Leave [2019] FWCFB 767 at [7] to [8]: ‘During the award

modernisation process a Full Bench of the Australian Industrial Relations Commission stated: “We have resisted suggestions that the terms of the NES should be included in the awards. As we understand it we are obliged by the terms of the consolidated request not to simply repeat the terms of the NES in modern awards”. This approach of including a reference to the NES instead of reproducing NES entitlements in modern awards has continued throughout the 4 yearly review process.’

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The provisions in proposed Division 4A of Part 2-2 of the FW Act do not apply to employees covered by a modern award that contains a casual conversion clause. Accordingly the NRA argues:

This therefore means that although at present the provisions of the Bill are modelled after the Fair Work Commission’s model casual conversion clause, over time there is a real risk that these provisions will start to diverge, whether by further amendment to the Act or by further revisions to the modern awards. This therefore means that whilst in the short-term the Bill achieves its intended policy objective of harmonizing, as best as possible, the rights of casual employees both award-covered and award free, in the medium- to long-term the Bill’s limited scope may tend to inhibit the continuing achievement of this policy objective.

68

Issue: application to certain enterprise agreement covered employees Proposed Division 4A of Part 2-2 of the FW Act will not apply to employees covered by an enterprise agreement which includes a compliant casual conversion term.69 Where the enterprise agreement includes a non-compliant casual conversion term (that is, one that does not meet the requirement in proposed subsection 205A(2)) the relevant modern award casual conversion clause (if there is one) will be deemed to be included in the relevant enterprise agreement.70

According to the Department of Jobs and Small Business (DJSB), ‘around two-thirds of existing current enterprise agreements (across all industries) do not currently have a casual conversion clause’.71 However, the effect of proposed subsection 205(3) (discussed above) means that it is likely that many such enterprise agreements will be deemed to include the applicable modern award casual conversion clause. However, where the relevant modern award(s) do not contain such a term, then the casual conversion right in proposed Division 4A will apply to the employees covered by that enterprise agreement.72

When can an employee request casual conversion? Proposed section 66B of the FW Act outlines when an employee covered by proposed Division 4A is able to make a casual conversion request. Under proposed subsection 66B(3) eligible employees:

• must be designated as a casual employee by the employer for the purposes of any fair work instrument (for example, a modern award) or in their contract of employment and

• in the 12 months before giving the request to the employer had worked a regular pattern of hours on an ongoing basis which without significant adjustment, the employee could continue to work as a full-time or part-time employee.

Where the above are satisfied, an employee who has worked the equivalent of full-time hours during the 12 months prior to giving the request to the employer can request conversion to full-time employment.73 If the employee has worked less than the equivalent of full-time hours during the 12 months prior to giving the request to the employer, they can request conversion to part-

Consistent with this approach, it is our provisional view that the model term be deleted in the exposure drafts produced as part of the 4 yearly review and replaced with the following…’. 68. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para. [6.1.12]-[6.1.13]. See also comments at paras. [6.1.5]-[6.1.10]. 69. FW Act, proposed subsection 66A(3). 70. FW Act, proposed subsection 205A(3). 71. DJSB, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2. 72. FW Act, note to proposed subsection 205A(3). 73. FW Act, proposed paragraph 66B(1)(a).

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time employment that is ‘consistent with the regular pattern of hours worked’ during the 12-month period prior to giving the request.74

These elements are discussed below.

Issue: ‘designated as a casual employee by the employer’ The Bill introduces a definition of casual employment for the purposes of casual conversion requests based on the employee being designated as a casual by the employer.75

As already stated, casual employment generally does not have a formal legislative definition. Instead, the common law definition applies. This has the effect of determining the nature of the employment relationship on a case by case basis. This long-standing approach was most notably recently confirmed in Workpac v Skene (discussed above).

The use of the phrase ‘the employee is designated as a casual employee by the employer’ in the Bill was an issue of substantial concern to some stakeholders.

Proposed definition would undermine existing common law definition The ACTU argues that the inclusion of the phrase ‘designated as a casual employee by the employer’ may result in that definition being used to interpret other parts of the FW Act, and thereby undermine the decision in Workpac v Skene, stating:

There is a risk that courts might interpret the FW Act differently if the Act is amended to explicitly contemplate an employer’s ability to unilaterally designate an employee as ‘casual’. 76

In evidence before the Committee, Mr Roberts from the ACTU stated:

There are plenty of examples of other terms which the courts have looked at for the purposes of one section of the [FW] Act and translated their view about the meaning of that term across into other sections of the [FW] Act. So it is conceivable, even with the best drafting intentions in mind, that, even if the bill did have some ring-fencing provisions, it would still present difficulties for a court that came to consider the meaning of casual employment in another context of the act if this employer designation model is introduced here.

77 (emphasis added)

Sean Howe, National Research Director at the AMWU, provided an example of how, in litigation, parties can use definitions that apply in one part of a statute to argue the same definition should apply elsewhere in the same statute:

Just by way of an example of what Mr Roberts is talking about, the AMWU has recently been involved in litigation with Mondelez regarding the definition of a 'day' for personal leave. Our submissions were drafted and lodged, I think, late last year, and in the intervening period the family and domestic violence leave amendment to the Fair Work Act was introduced. That includes a definition of a 'day', refers to definitions of a 'day' dealing with unpaid leave and attempts to draw that definition in. Mondelez did in fact use the introduction of that amendment to support its contention that the definition of a 'day’ was

74. FW Act, proposed paragraph 66B(1)(b). 75. FW Act, proposed subsection 66B(3). 76. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7.

77. T Roberts (Director of Industrial and Social Policy, ACTU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 19.

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other than an actual working day. It contended that it illustrated that there could be more than one meaning of 'day' in the act. 78

The ACTU argued that the effect of the ‘designated casual’ definition being applied elsewhere in the FW Act may lead to an undermining of the Workpac v Skene decision by allowing employers to ‘designate’ an employee as casual in circumstances where they are not (for example, because they work a regular pattern of hours over a long period of time with an expectation of on-going work). This would deprive such employees of various NES entitlements. Whilst the ACTU acknowledges that the Bill would enable such employees to request conversion to permanent employment, it argues:

Under the terms of the Bill, ‘Skene-like’ workers… would have a right to request conversion to permanency. However, under the Court’s decision, they would have no need for such a right since they are already permanent employees at law because their working arrangements do not lack a firm advance commitment as to the duration of their work, which the Court described as “the essence of casualness”. These workers may well have to in fact confront an argument that the reference to an employer’s right to designate them as a casual in the NES detracts from their status as permanent employees as determined in Skene.

79 (emphasis added)

In relation to whether or not the inclusion of a definition of casual employment that relies on the employer designating the employee as such for the purposes of proposed Division 4A may result in a court applying the new ‘designated’ definition of casual employment to other parts of the FW Act, Professor Stewart argues that:

a court could take the view that the provisions only make sense if being “designated” as a casual is taken for more general purposes to be the definitive indicator of whether a person truly is a casual for NES or other purposes. 80

While Professor Stewart considered that the more likely interpretation was that ‘being designated as a casual is relevant only to the operation of the new right to request conversion’, he went on to say ‘[b]ut if this is actually the intent, I fail to see why it is not stated more clearly in the Bill’.81

Proposed definition is ‘ring-fenced’ and would not undermine existing common law definition The Explanatory Memorandum notes that the ‘designated as a casual employee by the employer’ definition of casual employment in proposed section 66B of the FW Act is ‘only relevant for the limited purpose of whether or not an employee is eligible to make a request for casual conversion’ and:

The descriptor does not affect, alter or have any application for any other references to a ‘casual employee’ in the NES, or the Act more generally. For example, nothing in the Bill will alter the operation of the existing protections for eligible casual employees in Part 3-2 relating to unfair dismissal.

82 (emphasis added)

78. S Howe (National Research Director, AMWU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], pp. 19-20.

79. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 7-8. 80. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7. 81. Ibid. 82. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, p. 4, para 33.

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Professor Stewart acknowledges that the Explanatory Memorandum clearly indicates an intent that the ‘designated as a casual employee by the employer’ definition of casual employment will only apply to casual conversion requests. However:

… if this is actually the intent, I fail to see why it is not stated more clearly in the Bill. As it is, the Bill simply adds to an already uncertain position, by opening up a possible (but not necessarily successful) way around the decision in Workpac v Skene. As I have argued, this is a problem that the government should be trying to solve, not compound.

83 (emphasis added)

Despite the intention that the ‘designated as a casual’ definition used in proposed Division 4A of Part 2-2 of the FW Act should be confined to the operation of that Division (and not applied to other aspects of the operation of the FW Act), a number of stakeholders rejected concerns that the proposed definition would undermine the common law definition of casual employment in the manner discussed above.

For example, the AIG simply noted ‘the Bill does not define a casual employee for other purposes of the Act’.84 The NRA expressed a similar view stating:

This designation is not in any way expressed to define casual employment for any other provision of the Act, and consequently the objective test of casual employment as espoused by the Full Court of the Federal Court in WorkPac Pty Ltd v Skene continues to apply to all other provisions of the Act. This requirement of the employer “designating” the employee as a casual employee is a practical necessity in order for the proposed provisions to operate effectively.

85 (emphasis added)

The DJSB noted that the use of the ‘designated’ definition of casual employment was developed with the intention of ensuring:

… that the right is available to the broadest possible class of employees. Any alternative approach would have the effect of narrowing the class of employees who may be able to access the right to request in the bill. 86

The DJSB also noted that the use of the ‘designated’ definition was 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’.87

The ACCI discussed the issue extensively in its submission and stated that suggestions that the ‘designated casual’ definition would alter the common law definition of casual employment or would circumvent the effects of Workpac v Skene decision ‘are both factually incorrect and constitutionally impossible’.88 The ACCI argues that as section 51(xxxi) the Constitution restricts the Commonwealth Government from acquiring property on unjust terms:

83. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7. 84. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7. 85. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., para 8.23 to 8.2.4. 86. R Volzke (Senior Executive Lawyer, Department of Jobs and Small Business), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019

[Provisions], 19 March 2019, [proof], pp. 29-30. 87. DJSB, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 3. 88. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., para 33.

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… it is not possible for the Bill to have effect of circumnavigating [sic] Workpac v Skene as some have asserted. It is not possible for the Bill to have the effect of overriding an entitlement owed to misclassified employees, as the courts have already previously determined that in such cases employees may be legally entitled to back pay. As a result any part of the Bill which has the effect of trying to override such a legal right will almost certainly be found to be unconstitutional on acquisition of property grounds, as it would have the effect of acquiring an employee’s legal right to claim back pay for unpaid entitlements without compensation, therefore in breach of the constitutional requirement for such an acquisition to be on ‘just terms’.

89

In summary, industry and employer stakeholders were supportive of the ‘designated’ definition of casual employment for the purposes of proposed Division 4A. However, the AIG recommended that if the proposed definition ‘does not have sufficient Parliamentary support’ the ‘common definition of casual employment in awards, would also be acceptable’, that is ‘the employee is engaged and paid as a casual employee’.90

Issue: pattern of hours Proposed paragraph 66B(3)(b) of the FW Act provides that before an employee is eligible to request conversion from casual to permanent full-time or part-time employment they must have, in the 12 months prior to making the request worked ‘a regular pattern of hours on an ongoing basis’ which ‘without significant adjustment, the employee could continue to work as a full-time or part-time employee (as the case may be).’

The Explanatory Memorandum notes:

The term ‘regular pattern of hours’ is not defined. Determining whether an employee meets this requirement will involve consideration of the pattern of hours any particular employee has worked over the 12 month period prior to making their request to convert on a case by case basis. For example, if an employee has worked shifts of 8 hours each on every Monday and Tuesday for a 12 month period, it will be clear that they have worked a regular pattern of hours. Depending on the circumstances of any particular case, there may still be a regular pattern of hours even with slight fluctuations or variations in the specific times and days worked.

91 (emphasis added).

A number of stakeholders raised concerns about the drafting of proposed paragraph 66B(3)(b).

Industry and employer associations The AIG argues that the current drafting of proposed paragraph 66B(3)(b) lends itself to uncertainty regarding ‘how long the regular pattern of hours needs to be worked’ before an employee is eligible to make a casual conversion request.92 To overcome this perceived uncertainty, the AIG recommended that proposed paragraph 66B(3)(b) be amended as follows:

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 throughout the 12-month period 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).

93 (recommended amendment in bold)

As noted above, whilst the phrase ‘regular pattern of hours’ is not defined in the Bill, the Explanatory Memorandum notes that determining whether there has been a regular pattern of

89. Ibid., paras 38 to 39. 90. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 7-8. 91. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, p. 4, para 34. 92. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 8. 93. Ibid.

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hours worked by the employee ‘will involve consideration of the pattern of hours’ worked by the employee ‘over the 12 month period prior to making their request’.94 This is consistent with the preferred wording ‘throughout the 12 month period’ as suggested by the AIG.

The ACCI notes that modern awards typically contain clauses that ‘impose significant restrictions on the pattern of hours that may be worked by a part-time employee’, including the number of days, hours and ability to vary an employee’s hours.95 The ACCI also noted that whilst the Bill is based upon the model term devised by the FWC,96 and there is relevant guidance in the Explanatory Memorandum, nonetheless there was a risk that:

… a casual employee engaged to seasonally pick fruit or to work certain events or occasions (e.g. a casual employee who works as an usher at the MCG every boxing day test match or works every public holiday), could potentially still under the current drafting of the Bill be considered to be working a ‘regular pattern of hours’ although the period of engagement may be very limited and extremely irregular in nature.

97

In that case, the ACCI suggests that ’some additional wording in the Bill may assist in ensuring that casual employees who clearly work an “irregular” pattern of work are not entitled to conversion rights’.98

The ACCI proposed that the impugned paragraph be amended as follows:

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 with a reasonable expectation of continuing employment 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).

99 (recommended amendment in bold)

If that amendment was made to the Bill, the ACCI considers:

It may also go some way to assist in excluding the possibility that an employee could be eligible to convert to part-time employment where they have worked a “regular pattern of hours” that is in fact highly irregular, as the employee would potentially be a lot less likely, because of the irregularity of their work, to have any expectation of continuing employment.

100

Trade unions The NTEU notes that in the tertiary education sector:

Examples of casual or sessional academics include staff employed to deliver lectures and tutorials during semesters, and casual general staff employed as library assistants usually for nine months of the year during peak periods of the week. This can result in an employment relationship with one tertiary institution that can be long-standing and regular, characterised by a break in service between semesters over the Summer period or long breaks during non-peak work periods.

101

As a result, the NTEU argues that the current wording of the Bill would prevent such staff from ever meeting the ‘regular pattern of hours’ requirement imposed by proposed paragraph

94. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, p. 4, para 34. 95. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para 43. 96. Ibid. 97. Ibid., para 50. 98. Ibid., para 46. 99. Ibid., para 52. 100. Ibid., para 53. 101. NTEU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2.

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66B(3)(b). This is because such staff would not meet the ‘on an ongoing basis’ requirement, in part due the possibility that the ‘intermittent, but regular breaks’ that characterise casual employment in the tertiary education sector may ‘displace’ the right of such employees to seek conversion.102

The AMWU proposed that the relevant test should be where an employee ‘has worked in a pattern of employment consistent with part time or full time employment for no more than six months’.103

Other stakeholders The Job Watch Employment Rights Legal Centre (JWERLC) argues that the ‘ongoing basis’ requirement in proposed paragraph 66(3)(b) of the FW Act could be used by employers to ‘unfairly exclude’ employees employed on fixed-term contracts (including fixed-term casual employment contracts).104 Therefore the JWERLC argues that the Bill should ‘make it clear that casuals who are ostensibly engaged for a fixed term are not automatically ineligible to request to convert to permanent employment’.105

To achieve this, the JWERLC recommend that the Bill be amended to insert the words ‘whether or not under contiguous fixed term contracts’ after the phrase ‘an ongoing basis’.106

Process and type of conversion request In effect, proposed subsection 66B(1) of the FW Act creates two types of conversion requests: full-time and part-time.

Importantly, proposed subsection 66A(4) provides that for the purposes of proposed Division 4A references to full-time employment, or part-time employment do not include employment for a specified period of time, for a specified task or for the duration of a specified season (that is, fixed-term or seasonal employment).

If an employee is eligible and wishes to make either a full time or part time casual conversion request, they must make a request in writing to their employer.107

Full-time conversion request If the employee has worked the ‘equivalent of full-time hours’ in the 12 months before the request, the employee can request conversion to full-time employment.108 The ‘equivalent of full-time hours’ may be calculated by examining the hours of work of other full-time employees in the same or comparable positions with that employer.109

102. Ibid., pp. 5-6. 103. AMWU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2; S Howe (National Research Director, AMWU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual

Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 17: ‘Further, we also say that a right to convert to permanent employment should not be subject to an employer's right to refuse or an employee who has worked in a pattern of employment consistent with part-time or full-time employment for six months. We base that recommendation on the research that underpinned our submission to the Fair Work Commissioner regarding casual employment and casual conversion. That was attached with our submission to this committee.’ 104. JWERLC, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 4-5. 105. Ibid., p. 5. 106. Ibid. 107. FW Act, proposed subsections 66B(3) and 66B(2). 108. FW Act, proposed paragraph 66B(1)(a). 109. FW Act, proposed subsections 66B(4).

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Part-time conversion request If the employee has worked less than the equivalent of full-time hours in the 12 months before the request, the employee can request conversion to part-time employment consistent with the regular pattern of hours worked during that period.110

Issue: ambiguous meaning of ‘full-time’ and ‘part-time’ The NRA considers the expression ‘full-time hours’ in proposed paragraph 66B(1)(a) is ambiguous.

Whilst “full-time hours” are commonly defined under modern awards or enterprise agreements as being “an average of 38 ordinary hours per week” or similar terms, the expression “full-time hours” has no concrete meaning in the context of an award-free or agreement-free employee. 111

The NRA recommends the paragraph instead refer to the maximum weekly hours already specified for a full-time employee in paragraph 62(1)(a) of the FW Act, that is 38 hours.112

Professor Andrew Stewart also examined in detail the issues arising from the use of the terms ‘full-time’ and ‘part-time’ in various parts of the Bill. He notes:

Both the Bill and its EM are drafted on an assumption that employment relationships covered by the FW Act can be divided into three mutually exclusive categories: full-time, part-time and casual. In other words, being a ‘full-time’ or ‘part-time’ employee necessarily connotes a ‘permanent’ or ongoing (non-casual) arrangement.

Now it is true that most modern awards are drafted in that way. Crucially, however, such awards generally state that this is the case, with the three categories then being defined. The remaining provisions of the award are framed accordingly.

By contrast, the FW Act as it currently stands does not take that approach. There are a number of references to full-time or part-time employment, but those terms are not defined, and they are not used in any consistent way. 113

(emphasis added)

Professor Stewart also notes that without including any clear definition of the terms ‘full-time’ and ‘part-time’, passing the Bill may ‘have unintended and uncertain consequences for the operation of other provisions in the FW Act.’114 One of the issues Professor Stewart highlighted in this regard was in relation to pre-conversion service, discussed below.115

The JWERLC recommends the Bill be amended so as to not exclude fixed-term employment, as it currently does.116

Issue: length of service Modern awards and enterprise agreements with casual conversion clauses often differ in the length of service qualifying period applied, with periods of six to 12 months being the most common.117

110. FW Act, proposed paragraph 66B(1)(b). 111. NRA, Submission No. 7, op. cit., para. 6.3.2. 112. Ibid., para. 6.3.6. 113. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7. 114. Ibid., p. 8. 115. Ibid., p. 8. 116. JWERLC, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 4-5. 117. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: ACCI, op. cit., paras 26 and 62; AIG, op. cit., p. 9: ‘There are major

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Proposed subsections 66B(1) and (3) of the FW Act have the effect of imposing a 12-month length of service qualifying period. That is, an employee must have worked for at least 12 months before making a casual conversion request to their employer.

A number of stakeholders raised concerns about how the 12-month length of service qualifying period was to be applied. Most of those concerns related to how the ‘regular pattern of hours’ requirement would interact with the length of service qualifying period (discussed above).

However, the AMWU argues that a six-month length of service qualifying period should apply, rather than the proposed 12-month period.118

Obligation for employer to give employee a response Once an employee has made a casual conversion request in writing, proposed section 66C of the FW Act provides that the employer must give the employee a written response within 21 days.

The written response must state whether the employer grants or refuses the request. Proposed subsection 66D(3) provides that where the employer refuses the request, the written response must include details of the reasons for the refusal.

Issue: when can an employer refuse a casual conversion request? Proposed section 66D of the FW Act deals with when casual conversion requests can be refused by an employer. Proposed subsection 66D(1) provides that the employer must not refuse the request unless:

• the employer has consulted the employee

• there are reasonable grounds to refuse the request and

• the reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of refusing the request.

In relation to the consultation requirement, the Explanatory Memorandum notes:

The requirement to consult the employee who has made the request will allow the employer and the employee to discuss matters relating to the request, including reasons for a proposed refusal or alternative arrangements that suit the needs of both the employer and employee. For example, where an employer may not be able to offer an ongoing full-time position due to a foreseeable reduction in workload after six months, the employer may refuse the request, but separately propose a full-time contract on a six month fixed-term basis.

119

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.’; HIA, op. cit., p. 6: ‘While the new right to convert in the Bill is largely in line with a Model Casual Conversion Clause (developed by the Commission), it differs from a number of pre-existing casual conversion clauses. For example, under the Building and Construction General Onsite Award 2010 (Onsite Award) the casual conversion clause is based on an ‘election’ as opposed to a ‘request’… The casual employee must have been engaged for a sequence of periods of employment under the award for a period of six months’ and A Stewart, op. cit., p. 11: ‘the new provisions seem to overlook the fact that some conversion terms, especially in enterprise agreements, may be triggered after something less than 12 months.’ See also: M McKenzie (Chair, Council of Small Business Organisations Australia), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 2: ‘We've had a clause in the award for about six years now, I think. It's been operating on the basis of our trigger being a six-month conversion. We noticed in the 21 modern awards that were pre-existing prior to the adoption of the clause in the awards system that we had situations where there was a variance in the qualification period that was actually required. Some went from three months to six months and to 12 months.’ 118. AMWU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 2; S Howe (National Research Director, AMWU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 17. 119. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, para 39.

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Proposed subsection 66D(2) sets out a non-exhaustive list of what may constitute reasonable grounds for refusing a request:

• it would require a significant adjustment to the employee’s hours of work in order for the employee to be engaged as a full-time employee or part-time employee (‘significant adjustment’)

• the employee’s position will cease to exist in the period of 12 months after giving the request (‘cessation of position’)

• the hours of work which the employee is required to perform will be significantly reduced in the period of 12 months after giving the request (‘significant reduction of hours’)

• there will be a significant change in either or both of the following in the period of 12 months after giving the request:

- the days on which the employee’s hours of work are required to be performed - the times at which the employee’s hours of work are required to be performed which cannot be accommodated within the days or times the employee is available to work during that period (‘significant operational changes’) or

• granting the request would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

These grounds, particularly the significant reduction in hours and significant operational changes grounds, were of concern to some stakeholders, as discussed below.

Issue: grounds for refusal Industry and employer association stakeholders approved of the Bill providing employers with a right to refuse a casual conversion request on reasonable grounds.120 However, some employer and industry association stakeholders expressed concern that as part of any dispute relating to a casual conversion request, the FWC would be able to determine whether the employer had reasonable grounds for refusal (discussed below under the heading ‘Disputes about casual conversion requests’).121

120. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: APTIA, op. cit., p. 2: ‘The reasonable business conditions that are outlined in the decision of the Fair Work Commission and duplicated by the legislation (Section 66D) are a reflection of evidence placed by the APTIA before the Full Bench of the Fair Work Commission and should be protected in any legislation considered by your Committee’; AIG, op. cit., p. 3: ‘Critically, the right of an employer to refuse an employee’s request to convert on reasonable business grounds was preserved by the FWC and is preserved in the Bill.’. See also: I Fraser (Senior Adviser, Workplace Relations, ACCI), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 11: ‘ We think the employer's right to refuse on reasonable grounds is a really important one. It represents a balanced approach’; P Strong (CEO, Council of Small Business Organisations Australia), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p 4: ‘if someone says, 'I want to be permanent,' and there's a very obvious reason why it makes no sense from a business point of view, then it should be very easy and it should just be a case of ticking a box and not worrying about it.’; M McKenzie (Chair, Council of Small Business Organisations Australia), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 4: ‘I think exercising a universal right as opposed to providing for a request and then creating the opportunity for the business to provide reasonable grounds on which that request cannot be accommodated would be a fairly negative development for most small-business owners.’

121. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 10 (paras 6.6.26 to 6.6.33); HIA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7: ‘Section 66G does not exclude the consideration of reasonable grounds under s66D. This is at odds with the approach under the Act in relation to requests for flexible working arrangements. Under Section 739(2) of the Act the Commission is prohibited from dealing with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5), being a refusal of a request for flexible work arrangements, unless provided for in a contract of employment, enterprise agreement or some other kind of written agreement that allows the Commission to deal with the dispute. HIA submit that should the Bill proceed, section 739 and section 66G be amended to exclude consideration of ‘reasonable ground’ under section 66D.’

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Some trade unions opposed the inclusion of a right to refuse on reasonable grounds. The AMWU, when asked if employers should have a right to refuse a casual conversion request argues:

Where an employee has engaged in a pattern of work for a period of time and, by the sound of it, would generally not be considered to be a casual employee under the objective test that we've been talking about, we say that there should not be a right to refuse. 122

The ACTU also notes that fluctuating demand could be inappropriately used as reasonable grounds to refuse a casual conversion request as:

That's something businesses always have to plan for, have contingency for and deal with through rostering arrangements. But that can just be pointed to in general as a blanket reason to refuse. 123

The NTEU also argues that the grounds employers may rely upon to refuse a casual conversion request ‘are too broad’ and that ‘the breadth of the grounds to refuse render the right to request conversion essentially otiose’.124 In addition, the NTEU considers that proposed subsection 66D(2) effectively gives ‘employers the ability to rely on unspecified future considerations in order to refuse the request’ and that this ‘breeds opportunity for employers to avoid appropriate workload planning which would otherwise ensure consistent and ongoing work for employees’.125

The NTEU recommended that the grounds to refuse the request be confined to much more limited grounds, but did not specify how that might be achieved.126

When a request is granted Proposed subsection 66E(1) of the FW Act provides that where an employer grants a casual conversion request they must, within a reasonable period after the request was given to the employer, give the employee written notice of:

• the employee’s new employment type (full-time or part-time)

• the employee’s hours of work after the conversion takes effect and

• the day on which the conversion takes effect.

Proposed subsection 66E(2) provides that before the above written notice is given to the employee, the employer must discuss with the employee the matters listed above (that is, the employee’s hours of work after conversion and when the conversion will take effect). Proposed paragraph 66D(1)(a) effectively imposes a requirement on the employer to discuss the casual conversion request with the employee. In turn, proposed subsection 66E(5) provides that a notice of acceptance issued under proposed subsection 66E(1) can be included in the written response required by proposed section 66C. In other words, the employer can consult with the employee about their casual conversion request, and then provide a written response agreeing to the request, provided the items above are included in that document.

The Explanatory Memorandum notes that as a result of the above discussions ‘the employer and employee may also agree to enter into a new employment contract reflecting the new arrangement’.127

122. S Howe (National Research Director, AMWU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 21. 123. J Fleming (Legal and Industrial Officer, ACTU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 22. 124. NTEU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 6. 125. Ibid. 126. Ibid.

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When does the conversion take effect? Proposed subsection 66E(4) provides that where a casual conversion request is granted the employee is taken to have been converted to a full-time or part-time employee on and after the day specified in the written notice required under proposed subsection 66E(1) for the purposes of the following:

• the FW Act, or other any other law of the Commonwealth

• a law of a State of Territory (other than any such law prescribed by regulation)

• any fair work instrument that applies to the employee and

• the employee’s contract of employment.

Apart from dealing with when an employee’s employment converts from casual to full-time or part-time employment, the Explanatory Memorandum notes that the effect of this is that it will not be possible for the employee to become, for instance, a full-time employee for the purposes of the FW Act, but to remain a casual employee for the purposes of a modern award that applies to their employment. It will also ensure that employee’s employment type is consistent for all purposes under relevant Commonwealth, State and Territory laws (unless otherwise prescribed).128

Treatment of pre-conversion service A number of items in the Bill deal with how, in relation to other provisions of the FW Act, pre-conversion service is to be treated.

Case law on pre-conversion service under awards and enterprise agreements A number of submissions noted that two of the leading decisions regarding how pre-conversion service is to be treated under casual conversion clauses in awards and enterprise agreements appear to have reached different decisions, namely:

• Unilever Australia Trading Limited v AMWU (Unilever)129 - which dealt with the interpretation of redundancy provisions in an enterprise agreement. The key issue was whether, when calculating permanent employees’ entitlements to redundancy pay under that enterprise agreement, any prior pre-conversion casual or seasonal service was to be counted. The Full Bench of the FWC held that pre-conversion casual service did not count for the purposes of permanent employees’ redundancy pay entitlements under that particular enterprise agreement and

• AMWU v Donau Pty Ltd (Donau)130 - which dealt with pre-conversion service under an enterprise agreement that, in effect, provided that the NES applied in respect of the employer’s obligations with respect to redundancy pay. That is, the case dealt with a situation where the NES (rather than the enterprise agreement itself as in Unilever) governed how redundancy pay was to be calculated. The Full Bench of the FWC held that pre-conversion casual service does count for the purposes of permanent employees’ redundancy pay entitlements under the NES.

127. Explanatory Memorandum, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, para 48. 128. Ibid., para 53. 129. Unilever Australia Trading Limited v AMWU [2018] FWCFB 4463. 130. AMWU v Donau Pty Ltd [2016] FWCFB 3075.

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Stakeholders noted that the Bill appears to follow the Unilever decision rather than Donau - this is opposed by the ACTU and supported by industry and employer associations.131 How the Bill deals with pre-conversion service in relation to various existing NES entitlements is detailed below.

Pre-conversion service and annual leave, personal leave and termination of employment Items 8 to 14 in Part 2 of the Bill deal with how pre-conversion service interacts with the NES entitlements for annual leave, paid personal/carer’s leave, notice of termination and redundancy pay. In summary, they provide that any previous pre-conversion service (that is, employment as a casual with the employer) is not to be taken into account in calculating the eligibility to, and quantum of, their entitlements.

Annual leave Section 87 of the FW Act provides that for each year of service with their employer, an employee is entitled to four weeks of annual leave, or five weeks if the relevant modern award that applies to the employee describes the employee as a shift worker. Section 87 also provides that annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

Items 8 and 9 of Part 2 of the Bill amend section 87 of the FW Act to provide that periods of employment as a casual employee of the employer will not count towards the entitlement and accrual of annual leave. This means, for example, if an employee with two years of pre-conversion service converts to full-time employment, on the day the conversion takes place they will have no accrued annual leave and will commence accruing their entitlement to annual leave from that day.

Personal/carer’s leave Section 96 of the FW Act provides that for each year of service with their employer, an employee in entitled to 10 days of paid personal/carer’s leave. Section 96 also provides that paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

Items 10 and 11 of Part 2 of the Bill amend section 96 of the FW Act to provide that periods of employment as a casual employee of the employer will not count towards the entitlement and accrual of paid personal/carer’s leave.

Notice of termination and redundancy pay Section 117 of the FW Act deals with when (and how much) notice regarding termination of employment must be given by an employer to an employee. For example, an employee with ‘not more than one year’ continuous service is only required to be given one week notice, whereas an employee with more than five years’ service requires four weeks’ notice.132

Item 12 of Part 2 inserts proposed subsection 117(4) into the FW Act so that pre-conversion service (that is, employment as a casual with the employer) does not count for the purposes of determining the length of continuous service of an employee with the employer for the purposes of notice of termination.

131. See the submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions] from: ACTU, op. cit., para 25: ‘In AMWU v Donau Pty Ltd, however, the Full Bench dealt directly with the issue of pre-conversion service for the purposes of the NES and held that pre-conversion contiguous casual service does count for the purposes of redundancy and notice entitlements under the NES… As the leading authority on this precise issue, it is the principle that should be enacted. Yet the Bill reverses this position. Having regard to the transitional provisions, it appears the intended result is to diminish the accrued entitlements of sections of the workforce overnight upon this Bill taking effect.’; NRA, op. cit., para 7.2.3: ‘The amendments to the Act proposed in Items 8 to 14 to Schedule 1, Part 2 of the Bill are congruent with the decision of the Fair Work Commission in Unilever Australia Trading Limited v AMWU, and in the view of the NRA is the correct approach to take’; ACCI, op. cit., paras 66 to 70.

132. FW Act, subsection 117(3).

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Section 119 of the FW Act deals with when an employee is entitled to receive redundancy pay and if so, how much they are entitled to receive. For example, an employee with ‘at least 1 year, but less than 2 years’ continuous service is entitled to four weeks of redundancy pay.133

Item 13 and 14 of Part 2 have the effect of excluding pre-conversion service (that is, employment as a casual with the employer) for the purposes of determining the length of continuous service of an employee with the employer for the purposes of determining redundancy pay entitlements.

Requesting flexible working arrangements Section 65 of the FW Act deals with when employees can request flexible working arrangements. Existing subsection 65(2) provides that employees other than casual employees can request flexible working arrangements after 12 months of continuous service, and also extends that right to ‘long term casual’ employees who have ‘a reasonable expectation of continuing employment by the employer on a regular and systematic basis’. A ‘long term casual employee’ for these purposes is defined in section 12 of the FW Act as:

• a casual employee

• employed by the employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months.

Items 5 and 6 of Part 2 amend section 65 of the FW Act to provide that an employee who has converted to full-time or part-time employment under proposed Division 4A, or a casual conversion term in the relevant modern award or enterprise agreement is eligible to make a request for flexible working arrangements where their period of continuous service meets the existing requirements (that is, at least 12 months).

Unpaid parental leave Section 67 of the FW Act provides that employees with at least 12 months continuous service with an employer are entitled to unpaid parental leave. Subsection 67(2) provides that casual employees are also entitled to parental leave where they:

• are or would be before the birth or placement of the child, a long term casual employee and

• but for the birth or placement of the child would have ‘a reasonable expectation of continuing employment by the employer on a regular and systematic basis’.

Item 7 of Part 2 repeals and replaces subsection 67(1) of the FW Act so that an employee who has converted to full-time or part-time employment under proposed Division 4A, or under a casual conversion term in their relevant modern award or enterprise agreement, is entitled to request parental leave where their period of continuous service meets the existing requirements (that is, at least 12 months).

Issue: does the Bill deal with pre-conversion service appropriately? As noted above, stakeholders differed in their views about whether the Unilever decision should be reflected in in the Bill (which is the case), or whether Donau decision should be followed, in which case the Bill would have provided that pre-conversion service would have counted towards all of the NES entitlements noted above. For example, the AIG argued:

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. That matter has been considered in two different Fair Work Commission cases, as various

133. Ibid., subsection 119(2), table item 1.

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submissions have pointed out—the Donau case and the Unilever case. Ai Group represented the employer in the Donau case in the original proceedings and in the appeal. If you look at the commission members in those two cases, five members of the commission decided that periods of casual service don't count for redundancy entitlements and only three members of the commission expressed a different view. The issue does need to be clarified and put beyond doubt, and the bill sensibly achieves that.

134

In contrast, the ACTU argued that many casuals seeking conversion under the Bill would, as a matter of law (most recently expressed in Workpac v Skene) be permanent employees, not casual, and hence if a casual conversion request is agreed to by the employer, they effectively lose various NES entitlements such as annual leave which, as a matter of law they were entitled to prior to the conversion of employment taking place.135

Other rights and obligations Proposed section 66F sets out a number of other rights and obligations that are additional to those already found in the FW Act. These include:

• that nothing in proposed Division 4A:

- prevents an employee who converts under the Division from reverting to casual employment, but only with the written consent of the employer136 - requires an employee to convert to full-time or part-time employment137 - permits an employer to require an employee to convert138 or - requires an employer to increase the hours of work of an employee who requests

conversion to full-time or part-time employment under this Division139 and • prohibiting an employer from engaging and re-engaging, or not-re-engaging, an employee, or varying or reducing an employee’s hours of work, in order to avoid any right or obligation under proposed Division 4A.140

Section 44 of the FW Act provides that an employer must not contravene a provision of the NES. Therefore whilst proposed section 66F is not specified as a civil remedy provision,141 section 44 operates to ensure that breaches of the rights and obligations set out above attract penalties and can be enforced.142

134. S Smith (Head of National Workplace Relations Policy, AIG), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7. 135. See: J Fleming (Legal and Industrial Officer, ACTU) and T Roberts (Director of Industrial and Social Policy, ACTU), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 20-21. The discussion was summarised by Senator Watts (p. 20) in the following terms: ‘… if someone, for the purpose of this bill, is deemed to be a designated casual and has the right to seek conversion, the philosophical problem is that they shouldn't have been classified as a casual in the first place. But the practical consequences are that if they do get conversion then, great, they get to become a permanent—but they don't get the preconversion rights of being a permanent: leave entitlements, redundancy benefits and those kinds of things. And, if their request to convert is rejected, they're stuck as a casual, when you're saying they shouldn't have been a casual in the first place.’ 136. FW Act, proposed subsections 66F(1) and (2). 137. FW Act, proposed paragraph 66F(4)(a). 138. FW Act, proposed paragraph 66F(4)(b). 139. FW Act, proposed paragraph 66F(4)(c). 140. FW Act, proposed subsection 66F(3). 141. Professor A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment

(Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 12. 142. R Volzke (Senior Executive Lawyer, Department of Jobs and Small Business), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019

[Provisions], 19 March 2019, [proof], p. 30: ‘Just to round out that point, any suggestion that we put the civil penalty in the wrong place and that it should have been attached to 66F(3) is also not correct, because that already has a civil penalty attached to it by virtue of section 44.’

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Disputes about casual conversion requests Proposed section 66G of the FW Act deals with when the FWC can deal with a dispute about a casual conversion request.

When can the FWC deal with dispute about a casual conversion request? Currently modern awards and enterprise agreements must include provisions which provide a mechanism to resolve disputes arising under the modern award, enterprise agreement, or the NES.143

Proposed subsection 66G(2) provides that the FWC cannot deal with a casual conversion dispute if a term providing a procedure for dealing with the dispute is included in:

• a fair work instrument that applies to the employee (for example, an enterprise agreement or modern award)

• the employee’s contract of employment or

• another written agreement between the employer and employee.

The NRA opposes proposed section 66G on the basis that ‘it results in award- or agreement-free employees being provided with a dispute resolution mechanism’ not contemplated by the Act and that ‘goes beyond the scope of the other dispute resolution provisions in the Act’.144 Other stakeholders raised additional concerns, as noted below.

Issue: requirement to attempt workplace-level resolution of casual conversion disputes Proposed subsection 66G(3) provides that the parties to a casual conversion dispute must attempt to resolve the dispute ‘at the workplace level, by discussions between the parties’. This is a civil remedy provision.145 Ms Volzke, from the Department of Jobs and Small Business clarified how the civil remedy provision in proposed subsection 66G will operate:

… several submissions appear to misconstrue the effect of certain aspects of the bill. In that respect, particularly I want to talk about the effect of the dispute resolution clause and the fact that there is a civil penalty that's attached to that provision in 66G(3). Under the model clause in the award, any person who contravenes a dispute resolution clause—which includes in relation to the right to request casual conversion in a modern award or enterprise agreement—can be subject to a civil penalty. This is by the operation of sections 45 and 50 respectively of the Fair Work Act. Without the addition of the civil penalty in section 66G(3), only employers could be liable for contravening the dispute resolution process in the bill. That's not consistent with how the model clause operates, and the commitment that was given by the government was to ensure that that applied equally across the board. That is because section 44 of the Fair Work Act, which talks about contraventions of the NES, only applies to employers. Just to round out that point, any suggestion that we put the civil penalty in the wrong place and that it should have been attached to 66F(3) is also not correct, because that already has a civil penalty attached to it by virtue of section 44, which I just referred to before.

146 (emphasis added)

Issue: application of civil penalty provisions to employees A number of stakeholders raised concerns about the requirement that any disputes must first be attempted to be resolved at the workplace level, and that employees could potentially face penalties for taking disputes to the FWC before discussing their dispute with their employer.

143. FW Act, section 146 (modern award) and subsection 186(6) (enterprise agreements). 144. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para 6.5.2. 145. FW Act, note to proposed subsection 66G(3); item 16 of Part 2. 146. R Volzke (Senior Executive Lawyer, Department of Jobs and Small Business), Evidence to the Senate Education and

Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 30.

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For example, the AWU noted:

In my experience it's not uncommon for individual employees to overlook preliminary steps in dispute settlement procedures. There is a situation contemplated by the bill where a layperson—someone who is not an experienced industrial relations practitioner—who as a first step seeks to refer a dispute to the Fair Work Commission would be subject to a civil penalty to the tune of $12,000. This seems an unnecessary and extremely punitive provision.

147

The ACTU expressed similar concerns, stating ‘an employee who applies directly to the Commission to resolve a dispute could be sued for not raising the dispute at the workplace first’ and that this situation:

… is very bizarre for what is meant to be an NES entitlement for the benefit of employees. It is also entirely unnecessary because where a dispute resolution procedure mandates that preliminary steps be taken before referral of a dispute to the Fair Work Commission, the Fair Work Commission will not exercise jurisdiction in that matter.

148

The NRA was critical of proposed section 66G on the grounds that it ‘fails to set specific guidelines as to the nature and extent of each step of the dispute resolution process’.149 In contrast, the AIG considered that proposed section 66G is ‘consistent with the dispute resolution powers of the FWC under s.595 of the FW Act, and are appropriate’.150

Issue: parties must agree to arbitration Proposed subsection 66G(4) of the FW Act provides that where parties to a casual conversion dispute do not resolve the dispute by discussions at the workplace level, a party (for example, the employee) may refer the dispute the FWC. In turn, proposed subsection 66G(5) provides that:

• the FWC must deal with the dispute (for example by mediation, conciliation, making a recommendation or expressing an opinion) and

• if the parties agree to the FWC arbitrating the dispute, the FWC may deal with the dispute by arbitration.

This means that where one party to a casual conversion dispute (for example, the employer) does not agree to the FWC arbitrating the dispute, the FWC is prevented from making binding orders to resolve it. The JWERLC was critical of this requirement stating:

JobWatch believes that the Bill should require only the employee’s consent for a matter to proceed to arbitration at the Fair Work Commission (FWC). The requirement that both parties to the dispute must consent to arbitration at FWC under section 66G(5)(b) allows employers to refuse to settle at conciliation or mediation or to not act on a recommendation by FWC, knowing that FWC will not be able to order the completion of a casual conversion without the employer’s consent to arbitration. This gives the employer an unfair advantage at conciliation or mediation talks and may allow employers to approach these dispute resolution procedures in bad faith. In other words, the Right to Request Casual Conversion is not enforceable if arbitration can only occur with the agreement of the employer.

151

147. P Reilly (Industrial Officer, Victorian Branch, Australian Workers’ Union (AWU)), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019, [proof], p. 22.

148. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para 27. 149. A Millman (Senior Workplace Relations Adviser, NRA), Evidence to the Senate Education and Employment Legislation Committee, Inquiry into the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], 19 March 2019,

[proof], p. 26. 150. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 8. 151. JWERLC, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 3.

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Issue: should determination of ‘reasonable grounds’ be subject to arbitration? Currently section 146 and subsection 186(6) of the FW Act prevent the FWC from settling a dispute about whether an employer had reasonable grounds to refuse a request for flexible working arrangements or to extend a period of unpaid parental leave.152 As drafted, proposed section 66G contains no such restriction.

This means that the FWC would be entitled to examine the validity of reasons given to refuse a casual conversion request. The NRA argues that this is inappropriate as:

Other provisions of the National Employment Standards allow an employer to refuse a request from an employee on “reasonable grounds” or “reasonable business grounds”… where the Fair Work Commission has the power to engage in dispute resolution between the parties, subsection 739(2) of the Act prohibits the Fair Work Commission from dealing with a dispute to the extent that the dispute is about whether the employer had reasonable grounds for refusal. This is based on the principle that it is not for any executive or judicial body to dictate how any particular enterprise is to operate, due to the multitude of factors that inform these decisions which may not necessarily be apt for consideration in a public forum, including commercially sensitive information.

153 (emphasis added)

In commercial contract dispute cases, courts frequently are asked to determine whether or not a party is entitled to terminate a contract. In some circumstances, this can, in effect, result in the court dictating how a particular enterprise is to operate (at least in respect of the contract in question, for example, by finding a party is not entitled to terminate a contract, and hence effectively dictating that the party seeking to terminate must instead fulfil their contractual obligations).

Likewise under the FW Act, the FWC is empowered to deal with unfair dismissal cases. A person has been unfairly dismissed when, amongst other things, the FWC is satisfied the person’s dismissal was ‘harsh, unjust or unreasonable’.154 As a matter of practice, unfair dismissal cases frequently involve the FWC dictating how an enterprise can or cannot operate (for example, by ordering reinstatement).

Finally, under the Competition and Consumer Act 2010 (the CCA) a number of provisions have the effect of conferring on the Court the ability to examine commercial conduct in public proceedings and to issue orders that effectively dictate how a particular enterprise is to operate.155

Enterprise agreements Proposed section 205A(1) of the FW Act requires an enterprise agreement to include a casual conversion term if it does not already have one that is compliant with proposed Division 4A. The term included must be either:

• the same, or substantially the same, term as applying in the modern award applicable to the employees, or a term more beneficial than that term or

• a term that applies the entitlements in Division 4A, or a term more beneficial than those entitlements.156

Complexity of applying the comparison test The provisions add a new comparison test in different terms to the better-off-overall-test (BOOT).157 A proliferation of tests in different terms is not likely to contribute to the simplification

152. See: FW Act, note to section 146 and note 1 to subsection 186(6). 153. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., paras 6.6.28, and 6.6.30 to 6.6.31. 154. FW Act, section 385. 155. This can include ordering a business to divest assets or shares acquired in the contravention of section 50 of the CCA, or to

cease engaging in conduct that is misleading or deceptive or is likely to mislead or deceive (CCA, Schedule 2, clause 18). 156. FW Act, proposed subsection 205A(2).

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of the FW Act desired by many users. The ACTU objects that the proposed comparison test actually allows an enterprise agreement to ‘contain conversion clauses that are somewhat less beneficial than the applicable modern award or statutory standard’.158

Professor Stewart states:

No guidance is provided in the EM on how that comparison is to be made. 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?

159

In addition to the complexity of the comparative process itself, concerns were raised regarding enterprise agreements that provide for the terms and conditions of employment for employees covered by more than one modern award. The ACCI provides an example where an employer must consider provisions in multiple awards:

... what is more beneficial, the option to convert every 6 months on a take it or leave it basis under the Manufacturing and Associated Industries and Occupations Award 2010 Awards [stet] or a 12 month rolling entitlement under the Hair and Beauty Industry Award 2010? 160

The AIG expressed similar concerns, arguing that the Bill ‘fails to adequately account’ for an enterprise agreement that applies to employees who are covered by more than one modern award.161 In this regard, the AIG recommended:

Proposed s.205A(2)(a)(ii) and (2)(b)(ii) should 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 beneficial ‘on an overall basis’ to employees covered by any relevant modern award.

162

The ACTU argued that the effect of the ‘substantially the same… or more beneficial’ or ‘more beneficial on an overall basis’ tests in proposed subsection 205A(2) would be the likely approval of enterprise agreements that ‘contain conversion clauses that are somewhat less beneficial than the applicable modern award or statutory standard’.163

Consequently the ACTU proposes that, rather than applying the ‘substantially the same… or more beneficial’ or ‘more beneficial on an overall basis’ tests in proposed subsection 205A(2) the relevant test should be that enterprise agreements contain a conversion clause that is ‘no less beneficial’ on an overall basis to those employees.164

157. See generally: FW Act, Part 2-4, Division 4, Subdivisions B and C (paragraph 186(2)(d) and section 193 in particular). 158. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 8. 159. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to

Request Casual Conversion) Bill 2019 [Provisions], p. cit., p. 9-10. 160. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 10. 161. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], [Submission no. 10], March 2019, p. 8. 162. Ibid., p. 9. 163. ACTU, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], op. cit., p. 8. 164. Ibid.

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Retrospective effect on existing enterprise agreements A number of stakeholders expressed concern about the way that proposed section 205A interacts with existing enterprise agreements. AIG argues that proposed Division 4A is intended to be a ‘gap-filler’ and that is the way it should operate: the Bill should not ‘inappropriately disturb’ existing casual conversion provisions in awards or enterprise agreements.165

The ACCI observes that enterprise agreements are the product of negotiations between employers and employees and can therefore contain much greater variation in terms of casual conversion clauses than modern awards.166

... the Bill will have the effect of disturbing existing arrangements in enterprise agreements that provide for casual conversion, as well as enterprise agreements that had previously negotiated for casual conversion rights to be traded away in exchange for other entitlements or benefits for employees. 167

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.

168

AIG also noted that the existing agreements have already passed the BOOT opining that ‘it is unfair to an employer to effectively overturn the casual employment arrangements in an enterprise agreement that has already been assessed as leaving employees better-off overall’.169

The ACCI urges that the Bill not disturb existing arrangements until an enterprise agreement is replaced or terminated and argues:

… 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). The Australian Chamber submits that the Bill should be amended in sections 205A and 43 to reflect this.

170

However, AIG points out that difficulty may still remain even if the issue is left until the agreement is renegotiated:

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.

171

165. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7, 9. 166. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 9-10. 167. Ibid. 168. Ibid., p. 11. 169. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], [Submission no. 10], March 2019, p. 9. 170. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 11. 171. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], [Submission no. 10], March 2019, p. 9.

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Professor Stewart expressed the view that problems applying the comparison test will not be overcome when new enterprise agreements are negotiated unless the casual conversion term copies exactly the NES term. The FWC would need to either:

• before approving the agreement, apply the comparison test when assessing the BOOT or

• ignore the comparison test before approving the award, but then address the issue after approval when it is considering whether to note the inclusion of a replacement term.172

Issue: the Bill would undermine enterprise bargaining Proposed subsection 205A(3) of the FW Act provides for a mandatory ‘reading in’ or ‘deeming’ of a new or updated casual conversion term to an existing enterprise agreement. The application provision in proposed sub-item 43(2) of proposed Part 9 of Schedule 1 of the FW Act the Bill provides that this will apply to enterprise agreements made before, on or after commencement of the Bill. The NRA states that this would undermine the integrity of the bargaining process for enterprise agreements as a whole, and therefore undermine the stated objective of the FW Act to promote enterprise bargaining:

As a case in point, the Manufacturing and Associated Industries Award 2010 has included a casual conversion clause since it came into effect in 2010. In 2017, the Fair Work Commission approved the Engineering Resources National Manufacturing and Associated Industries Enterprise Agreement 2017 [FWCA 1651]. That Agreement does not include a casual conversion clause or anything similar, and this was agreed to by employer and employees.

173

Submissions to amend or remove proposed section 205A and item 43 Some stakeholders submitted that proposed section 205A and item 43 of proposed Part 9 of Schedule 1 of the FW Act should not be passed.174 The NRA argues:

The Act has, since its inception, allowed for employers and employees to bargain in relation to the provisions of modern awards, allowing ‘give and take’ on these terms and conditions of employment in order to achieve a mutually acceptable arrangement… 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.

175

The AIG recommends that item 43 of proposed Part 9 of Schedule 1 of the FW Act be amended to ensure that the ‘reading in’ of a casual conversion clause into an enterprise agreement would only apply to enterprise agreements approved on or after the commencement of the Bill.176

172. A Stewart, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 10. 173. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para. [6.7.16]. 174. See submissions to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions] from: ACCI, op. cit., pp. 9-11 and para 65; AIG, op. cit., pp. 8-10; NRA, op. cit., paras 6.7.6 - 6.7.17. 175. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., paras 6.7.12 and 6.7.16. 176. AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request

Casual Conversion) Bill 2019 [Provisions], [Submission no. 10], March 2019, p. 10.

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Other provisions

Power of Fair Work Commission to resolve difficulties with enterprise agreements Item 17 in Part 2 of the Bill inserts proposed Part 9 into Schedule 1 of the FW Act. (Schedule 1 sets out application, saving and transitional provisions relating to amendments of the FW Act.) Proposed Part 9 provides a mechanism for the FWC to assist employers, employees or employee organisations covered by an enterprise agreement to resolve any uncertainties or difficulties relating to how the agreement interacts with proposed Division 4A of Part 2-2 and proposed section 205A.

Subclause 41(1) in proposed Part 9 provides that on application by an employer, employee or employee organisation covered by an enterprise agreement that was made before the commencement of the Bill, the FWC may make a determination varying the agreement to:

• resolve an uncertainty or difficulty relating to the interaction between the agreement and the provisions of proposed Division 4A or proposed section 205A or

• make the agreement operate effectively with those provisions.

This power was accepted by most stakeholders who commented on it.177 However the NRA recommended that new Part 9 be amended to prohibit the FWC from ‘back-dating the effect of a determination varying an enterprise agreement to a date before the commencement of the provisions of the Bill’.178

Providing employees with Fair Work Information Statements Subclause 42(2) of proposed Part 9 provides that an employer must, within three months after the day that Fair Work Amendment (Right to Request Casual Conversion) Act commences, give each existing casual employee to which Division 4A will apply, an updated Fair Work Information Statement (FWIS) - even if the employee has already received a FWIS from their employer.179

Employer and industry association stakeholders opposed this requirement on the ground that it was unnecessary.180

In contrast the Federation of Ethnic Communities’ Councils of Australia (FECCA), whilst not directly referring to the requirement to provide existing employees with a FWIS advocated that:

More information needs to be provided in simple English, languages other than English, through multiple channels and be industry specific. Efforts should be made to make this information available to all visa holders with links to advocates, legal services as well as the Fair Work Ombudsman to help workers to pursue their rights.

181

177. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., paras 7.4.1-7.4.2; AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 10; ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para 83.

178. NRA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., para 7.4.3. 179. Sections 124 and 125 of the FW Act require the Fair Work Ombudsman to prepare and publish a Fair Work Information Statement (FWIS), which an employer must give to new employees. The FWIS includes information on the NES, right to

request flexible working arrangements, modern awards, making agreements under the FW Act, individual flexibility arrangements, freedom of association and workplace rights (general protections), termination of employment, right of entry and the role of the FWO and the FWC. 180. ACCI, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., pp. 12-13; HIA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 7; AIG, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 10. 181. FECCA, Submission to the Senate Education and Employment Legislation Committee, Fair Work Amendment (Right to Request Casual Conversion) Bill 2019 [Provisions], op. cit., p. 3.

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Concluding comments The Bill would extend casual conversion rights to employees covered by the FW Act that do not currently have such rights. Whilst the Bill is broadly consistent with the FWC model casual conversion clause, its passage may introduce further complexity into the enterprise agreement approval process.

In addition, given the ongoing divergence between the long-standing and well known common law definition of casual employment and industrial practice, it is not clear whether an approach of providing casual conversion rights to employees (as proposed by the Bill) or enshrining the common law definition of casual employment into the FW Act to encourage employers to appropriately classify employees would be more effective in dealing with the phenomena of so-called ‘permanent casual’ employment.

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