One-sided flexibility in the workplace: Australian and UK responses - Employee Rights/ Labour Relations

The recent Fair Work Commission (FWC) Full Bench decision to insert casual conversion clauses in modern awards,¹ and the Report of the Taylor Review of Modern Working Practices in the UK,² are responses to the same world-wide phenomena.

Increasingly, businesses are wanting to engage workers flexibly: over the last 20 years, this has led to the growth of casual, part-time and fixed-term employment – and independent contractor arrangements – in Australia.

The most recent manifestation of this flexibility has been the rapid rise across the globe of the 'gig economy': technology-based platforms which match consumers to workers who provide services.

However, the Theresa May Government-initiated Taylor Review has noted concerns that some employers use flexibility to transfer risk to – and exert control over – workers: what the Report describes as 'one-sided flexibility'.³

In this article, we examine the parallels between the Australian and UK debates over workplace flexibility – and the most recent regulatory responses to the issue.

AUSTRALIA: THE FWC CASUAL CONVERSION DECISION

One of the main devices unions in Australia have used to limit casual work has been the insertion of casual conversion clauses in awards and enterprise agreements. Under these clauses, casual employees obtain the right to request a permanent position after a certain period (6-12 months).

Casual conversion clauses became an award standard following test cases run by the union movement from the late 1990s. Under Work Choices, these clauses could no longer be included in federal awards. While they may be included in awards under the Fair Work Act 2009 (Cth), casual conversion clauses were initially only included in those modern awards where they had become an industry standard.⁴

In the modern awards review process, the Australian Council of Trade Unions (ACTU) sought to have a model casual conversion clause inserted in the 88 awards which didn't have one, and also sought the variation of casual conversion clauses in 17 awards which did.

In its decision of 5 July 2017, the FWC Full Bench determined that modern awards should contain a provision enabling casual employees to elect to convert to full-time or part-time status, but with significant restrictions on this right.

Under the model casual conversion clause proposed by the FWC, a casual employee can request conversion once the employee:

has been employed for at least 12 calendar months; and
over that period, has worked a pattern of hours on an ongoing basis which could continue to be performed on a part-time or full-time basis (without significant adjustment)

However, an employer may refuse a casual employee's request to convert to full-time or part-time on the grounds that:

a significant adjustment to the casual employee's hours would be required to accommodate the request; or
it is known or reasonably foreseeable that the casual employee's position will cease to exist; or
the employee's working hours will significantly change or be reduced within the next 12 months; or
on other reasonable grounds.

The employer must also provide all casual employees with information about casual conversion within 12 months of their engagement commencing.

The FWC has invited submissions from interested parties on the proposed model casual conversion clause by 2 August 2017.

Given that conversion rights in existing awards are not frequently utilised (for example, in manufacturing), there must be some question as to how effective this new casual conversion clause will be in practice.

Evidence presented to the recent Victorian Labour Hire Inquiry indicated that casual conversion clauses have proved to be of limited effect in the labour hire context (where workers are overwhelmingly engaged as casuals). The Inquiry heard that many labour hire workers do not request conversion even where they have the right to do so, possibly because they prefer to retain their casual loading.⁵

In reaching its decision in the casual conversion case, the FWC accepted the ACTU's argument that the unrestricted use of casual employment can operate to undermine the effectiveness of the safety net provided by modern awards and the National Employment Standards. Evidence presented to the FWC indicated that some employers engage, as long-term casuals, persons who want permanent employment. The Full Bench therefore concluded that it is fair and reasonable for those employees to have access to a mechanism for converting the casual employment to an appropriate form of permanent employment.

UK: THE TAYLOR REVIEW REPORT

A similar kind of concern about the ongoing nature of many forms of irregular work can also be seen in the Taylor Review Report.

The Review was initiated by the UK Government last year, largely in response to the increasing use of 'zero hours contracts' (roughly equivalent to casual employment in Australia) and the growth of the 'gig economy'.

Taylor's recommendations – which have been criticised as weak by key unions, but praised as achieving the right balance by the Institute of Company Directors – include the following:

Making it easier for non-permanent workers to be classified in the intermediate category of 'worker' under UK employment legislation, and therefore obtain some statutory employment rights (e.g. the minimum wage, holiday pay and sick leave). The worker category would be re-named 'dependent contractor', with greater emphasis accorded to the level of control exercised by the organisation for which services are performed – and less on whether the worker is able to substitute another to perform services in determining dependent contractor status.
Enabling workers in the gig economy to obtain payment on a kind of 'piece rates' basis, through which they are compensated for tasks performed – as long as they clear the national minimum wage level with a 20% margin of error.
Providing agency workers (i.e. labour hire staff) with the right to request a direct employment contract with the hirer once they have been engaged with the same hirer for at least 12 months. The hirer would be required to give reasonable consideration to the request.
Providing a similar right to workers on zero hours contracts (i.e. the right to request, after 12 months, a contract guaranteeing hours which better reflect those actually worked).

The last two of Taylor's proposals are, of course, very similar to the notion of casual conversion endorsed by the FWC here in Australia. These proposals are also likely to be subject to the same limitations as casual conversion clauses, especially the right of the employer to reject requests for more permanent forms of engagement. In any case, the UK Government's response to the Taylor recommendations was lukewarm, and it would have to negotiate any change proposals with its Coalition partner (the DUP).

Professor Anthony Forsyth was Chair of the Victorian Government Inquiry into Labour Hire and Insecure Work in 2015-16.

Footnotes

¹ 4-yearly review of modern awards – Casual employment and part-time employment [2017] FWCFB 3541 (5 July 2017). The decision also dealt with various other aspects of casual and part-time work, including union claims for increased minimum engagement periods for these workers and provisions 'deeming' casual employees to be full-time or part-time. As to how these and various employer claims were decided upon by the FWC, see further the FWC's Decision Summary at:
https://www.fwc.gov.au/documents/decision_summaries/2017fwcfb3541-summary.pdf

² Good Work: The Taylor Review of Modern Working Practices, July 2017. https://www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practices

³ Ibid, Part 6.

⁴ Award Modernisation (2008) 177 IR 364.

⁵ Victorian Inquiry into Labour Hire and Insecure Work: Final Report, 31 August 2016, pages 95-96.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.