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Division 4A of Part 2-2 of the Fair Work Act 2009 (Cth) (FW Act), which came into operation on 27 March 2021, imposes an obligation on employers of casual employees to make offers of conversion to permanent employment in certain circumstances.

Specifically, employers are required to offer casual employees conversion to permanent employment if:

• the employee has been employed by the employer for a period of twelve months; and
• during at least the last six months of that period, the employee has 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).

If the above criteria have been satisfied, then the offer must be made unless there are “reasonable grounds” not to make the offer which are based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer.

One of the examples of “reasonable grounds” identified within the FW Act is if, in making the offer, an employer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or Territory – a ground recently considered by the Fair Work Commission (FWC) in CPSU, the Community and Public Sector Union v Commonwealth of Australia (Services Australia) [2022] FWC 1246.

In this decision, an issue had arisen in relation to Services Australia’s (the Employer’s reliance on this ground as a reason for not making offers to a number of casual employees.

The Employer had argued that the Public Service Act 1999 (Cth) (the PS Act) required it to comply with a merit-based selection process for engagement or promotion and that offers of conversion could only be made if a “vacancy” existed at the time of assessing a casual employee’s eligibility for conversion to permanent employment.

At the time of assessment for conversion, the employees were found to be suitable based on the merit principle required by the PS Act and placed in an active merit pool. However, as no vacancies existed at the time of assessment, the Employer advised those employees that it had reasonable grounds for not offering them conversion to permanent employment.

In filing its application with the FWC, the Community and Public Service Union(the Union) argued that a decision that a vacancy did not exist effectively meant that the Employer had decided it did not wish to create an ongoing role or to acknowledge that it must offer an ongoing role, which was inconsistent with the casual conversion provisions of the FW Act.

The FWC rejected the Employer’s argument. It considered that, once eligible casual employees met the criteria under the FW Act for casual conversion, the Employer was obligated to offer them permanent employment.

The FWC found that it could not accept the Employer’s argument that a “vacancy” needed to exist before an offer of conversion could be made because it “would result in [the Employer] being able to frustrate, in its entirety, the intention of the Casual Conversion Term”. Specifically, it would “allow [the Employer] to assert a preference that certain work continues to be performed on a casual basis instead of an ongoing basis”. This was particularly so in circumstances where section 8 of the PS Act expressly stated that its effect was subject to the FW Act.

Lessons for employers

When assessing the eligibility of casual employees for conversion to permanent employment, it is important to note that, if an employee satisfies the requisite eligibility criteria set out in the FW Act, an employer is obligated to make an offer of conversion to permanent employment.

It is clear from this decision that the obligation to make an offer is not subject to an employer assessing whether there is a permanent employment position available. Once a casual employee is determined to be eligible for conversion to permanent employment, then the offer must be made unless there are reasonable grounds for not doing so.

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