Casual conversion to permanent employment: Employer guide

Managing casual employees has never been simple. Shifting rosters, different entitlements and compliance obligations can quickly leave you feeling confused and overwhelmed. And now, with the Federal Government’s Closing Loopholes reforms introducing new rules around casual conversion, it’s more important than ever to understand your obligations and your employees’ rights.

We’ve put together this employer guide to help you understand what these changes mean for you and your business.

What’s in this employer guide?

In this guide, we’ll cover everything you need to know, including the: 

• Process for casual conversion
• New ‘employee choice’ pathway 
• Definition of a casual employee
• The eligibility criteria for conversion 

Download the casual conversion guide now by filling out the form on the right.

What are the changes to the casual conversion rules?

Prior to August 2024, employers (except small businesses) had to proactively offer casual employees the option to convert after 12 months if they had a regular work pattern.

Now, under the ‘Employee Choice Pathway’, that responsibility has shifted. Employers no longer need to make an offer. The employee must request conversion if they believe they no longer meet the definition of a casual worker.

Here’s what that means in practice:

• The onus is now on the employee to start the conversation.
• Employers still have to respond in writing within 21 days.
• Employers can refuse a request only on certain reasonable grounds (which we’ll unpack below).

Understanding the previous casual conversion process

Previously, employers (except small businesses) were required to proactively offer casual employees the option to convert after 12 months of regular work. The new rules remove this obligation, placing the onus on employees to initiate the process.

What is the new Employee Choice Pathway?

The Employee Choice Pathway is a major reform that empowers employees to request casual conversion. This means eligible employees wanting to convert to permanent employment will need to: 

• Employees must notify their employer in writing.
• Employers must respond within 21 days.
• Employers can only refuse requests on reasonable grounds, such as operational challenges or if the employee still meets the casual employee definition.

Who is eligible to request casual conversion?

Eligibility depends on the employee’s work pattern and service period:

• Small business employers: Casual employees can request conversion after 12 months of employment.
• Non-small business employers: Casual employees can request conversion after 6 months of employment.

Employees must demonstrate that they no longer meet the new casual employee definition, such as working regular and predictable hours and having an ongoing expectation of work.

What defines a true casual employee?

Under the Fair Work Act, a casual employee is someone who:

• Has no firm commitment to ongoing and indefinite work.
• Receives casual loading or a specific casual pay rate.
• Can freely accept or decline shifts.

Employers must assess the reality of the working relationship, not just the employment contract, to determine if an employee is genuinely casual. Misclassification risks can lead to disputes and compliance issues.

How do the new casual conversion rules work?

The new process involves several steps:

1. Receive the notification: Employees must submit their request in writing.
2. Review the request: Assess eligibility and whether the employee meets the employment status criteria.
3. Consult with the employee: Discuss their work pattern and business needs.
4. Respond in writing: Provide a decision within 21 days, including reasons for refusal if applicable.
5. Implement the conversion: If approved, update the employment contract, pay rate, and entitlements.

How to respond to a casual conversion request

Employers must adhere to the strict 21-day deadline to avoid compliance risks. This includes providing a written notice of the decision and consulting with the employee.

The 21-day response timeframe

Employers must adhere to the strict 21-day deadline to avoid compliance risks. This includes providing a written notice of the decision and consulting with the employee.

What to include in your written response

A written response should clearly state whether the request is accepted or refused, provide reasons for refusal, reference the casual employment laws and outline next steps, such as updating the employment contract if the request is approved.

Consultation requirements with employees

Employers must engage in genuine consultation, discussing the employee’s work pattern, business needs, and the implications of conversion.

Can an employer refuse a casual conversion request?

You can only refuse a casual conversion request for specific, reasonable reasons. We’ve outlined the reasons below. 

1. The employee still meets the definition of a casual employee

If they still have irregular hours, can reject shifts and aren’t guaranteed ongoing work, you can reasonably refuse the request.

2. There are fair and reasonable operational grounds

This includes situations where:

• Converting would significantly impact your operations;
• You’d need to restructure or reorganise work; or
• The change would cause you to breach a Fair Work instrument (e.g. permanent employees can’t work weekends under your award and you still require the employee to do weekend work).

3. The request would breach recruitment rules

Mostly relevant to public sector employers who must follow strict hiring processes.

What happens when there’s a dispute?

Disputes can arise if an employee disagrees with the employer’s decision. Employers should aim for workplace-level resolution first. If unresolved, the matter can escalate to the Fair Work Commission.

Managing casual conversion compliance in your business

The new casual conversion rules shift the power to employees, but for employers, that’s actually a win. Instead of manually managing proactive offers and tracking every anniversary, you now only need to respond when an employee makes a request.

The key here is to stay informed, keep good records and respond to requests within the timeframe. With the right systems and support, you can manage casual conversions with confidence, protect your business from risk and strengthen trust with your team.

Here’s a few things you can do to help manage the casual conversion changes:

• Update policies and procedures.
• Train managers on the new rules.
• Use HR software to track employee’s hours, manage records and automate reminders.

Download the full casual conversion guide now

As you can see, there’s a lot to be across when it comes to managing casual employees. The full guide outlines everything you need to know, so you can be confident you’re managing your employer obligations. 

Download the full casual conversion guide now by filling in the form on the right.

Disclaimer: The information in this guide is current as at October 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this guide are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this guide. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this guide.