The Fair Work Commission (the “FWC”) recently addressed the right to convert to permanent employment when an industrial instrument (in this case an enterprise agreement) provides such a right. Of particular interest was the FWC’s consideration of the right to convert on a “like for like” basis.

The relevant term of the enterprise agreement provided that:

“… where a casual Transport Worker has been directly employed by Toll or engaged through a labour hire company to perform work for Toll on a regular and systematic basis for more than 6 months, the Transport Worker may elect to become a permanent Transport Worker, on a like for like basis, within the specific business unit at which the Transport Worker is engaged, in accordance with the Award.”

The employee claimed that he had a right to convert from casual employment to permanent employment on a “like for like” basis. Previously he worked Monday to Friday, normally commencing at 4.00am, and generally did an eight-hour shift. He wanted an equivalent position on a permanent basis.

The offer initially proposed by the employer was “made up of 4 hour, 5 hour and 6 hours shifts” and was communicated as amounting to “30 hours a week”. The employer asserted that this complied with the casual conversion clause of the enterprise agreement and the award.

The FWC ultimately concluded that the offer did not reflect the right conferred by the enterprise agreement to convert casual employment to permanent employment on a “like for like basis”.

It reached this conclusion on the basis that the phrase “like for like”:

1. is to be interpreted “with a practical bent of mind” and in the manner which it was “likely to have been understood in the context of the relevant industry” (per this decision);
2. requires a comparison between the nature and extent of the work previously performed by a casual employee with that of a permanent employee performing much the same work; and
3. has to be applied to the facts and circumstances of each individual employee and the workplace in which the work is performed.

While it was held that mathematical precision is not required, the FWC accepted that it is a tool which assists in reaching an informed decision when comparing competing positions.

In this case, the nature and extent of the ordinary hours worked by the employee was a little less than eight ordinary hours per shift and about 34 hours per week. If you were to include ordinary hours together with overtime, the employee worked just over eight hours per shift and slightly more than 38 hours per week.

An offer of a position made up of “4 hour, 5 hour and 6 hour shifts” fell short, as in the casual role, the employee regularly worked Mondays to Fridays for periods in excess of six hours per shift. To meet the requirements of the enterprise agreement to convert employment on a “like for like” basis, the employee was entitled to a permanent full-time position.

In addition, the FWC added that the right to convert was not limited by what the employer may have been prepared to offer and it was “not merely a right to convert to a permanent position; it [was] also a right to convert to a permanent position on a “like for like basis”.”

This decision demonstrates that the FWC will adopt a fairly strict approach to interpreting casual conversion provisions in enterprise agreements (and potentially awards). Employers should be mindful when negotiating enterprise agreements, to avoid terms which may result in business outcomes that may not be sustainable.

We do note that in this case the employer did not argue that a permanent full-time position was not available for the employee and this could be relevant in other conversion situations.