Despite your best efforts to make 2016 your breakout year, things haven’t worked out and now you need to downsize in order to save your business.
You believe your best option is to change a couple of permanent full-time workers to casual, coupled with some other organisational ‘tweaks’.
Hopefully, that will provide you with some ‘breathing space’ and give you the time and the flexibility to slowly rebuild.
But are you legally permitted to change a person’s employment from permanent to casual in order to circumvent making the position redundant and therefore avoid making redundancy and notice payments? Because, to make this move successful, your business needs to make these changes as quickly and cheaply as possible.
Well, really, your plan’s success depends on your worker.
If the employee agrees to the change, no notice will be required. You will have to pay out annual leave and LSL entitlements.
But you’ll still likely have to pay redundancy, (you should seek specific legal advice on this). That’s because you will need to make the permanent role redundant and offer the worker redeployment to the casual role.
Then, if the employee refuses to accept the role, you would have to pay notice and redundancy.
You could apply to the Fair Work Commission for an exemption from redundancy pay requirements on the grounds that you have provided suitably acceptable employment but unless there are really generous benefits offered to offset the insecurity of the casual employment, the application is unlikely to succeed. And if you’re restructuring in order to save the business a few quid, how generous could you make the new offer?
The National Employment Standards (NES) suggest that if a substantial reason for employing someone as a casual rather than as a permanent employee was to avoid NES redundancy pay and notice requirements, look out, because those requirements will apply.
And if you change the status of the workers from permanent to casual without their agreement because they have entitlements to NES notice and redundancy, the worker will have claims under general protections laws. If they consider themselves to have been constructively dismissed, you will also face unfair dismissal claims.
What’s more, the Fair Work Ombudsman may penalise your company for breaches of the Fair Work Act 2009 (Cth).
So, don’t make your decision hastily, even if your worker is happy for the change.