Court punishes employer for failing to apply casual conversion clause properly

The Federal Court of Australia has fined an employer who refused a employee the opportunity to convert his casual employment to equivalent full-time employment.

The employee was a freight handler with a major transport company.  The employee had a right to elect to convert from casual employment to equivalent permanent employment under the both the relevant Enterprise Agreement and the casual conversion clause in the Award.

The employee made a number of allegations in his claim, but the allegation that the Employer had refused to convert his employment to permanent employment “on a like-for-like basis”, is the allegation of interest for employers.

The meaning of “on a like-for-like basis” was the subject of much discussion in the decision.  Justice Flick noted that the employee on average worked a little more than 8 hours per shift and a little more than 38 hours per week.   This was based on a 46 week year, taking into account that casuals do not get annual leave or personal leave.   Justice Flick found that based on those hours, the employee was entitled to a permanent full-time position.

Justice Flick noted that the employee was offered “4 hour, 5 hour and 6 hour shifts”, and that this offer fell short of the entitlement to convert on a like for like basis.  Justice Flick noted that the right to convert is “not merely a right to convert to a permanent position; it is also a right to convert to a permanent position on a “like for like basis”. It is not a matter within the sole province of an employer to offer less than the right conferred.”

Justice Flick imposed penalties of $42,500 (payable to the employee) for various breaches of the Fair Work Act, $10,000 of which related to the failure to convert on a like for like basis.

Lessons for Employers

Earlier this year, the Fair Work Commission ruled on what will be the implementation of casual conversion clauses into all modern awards, so employers will need to be very aware of how and when these conversion clauses will apply.  For those employers already dealing with a conversion clause, as well as for future application, it will be essential for employers to assess what an appropriate conversion for an employee will look like, and ensure compliance with the relevant clause in undertaking that conversion.