On 26 August 2024, new amendments to the Fair Work Act 2009 (Cth) (FW Act) will change the requirements around casual conversion to permanent employment.

What are the current casual conversion rules?

Currently the FW Act imposes a positive obligation on an employer (other than a small business employer) to offer their casual employee conversion to permanent employment if:

• they have been employed for 12 months; and
• during at least the last 6 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.

An exception to this requirement is if there are reasonable grounds not to make the offer based on facts that are known, or reasonably foreseeable, at the time.

What will change?

On 26 August 2024 amendments to the FW Act casual conversion scheme will take effect, which will remove this positive obligation. However, the positive obligation will continue to apply until 26 February 2025 for employers who were not small business employers on 26 August 2024 in relation to their casual employees commencing before 26 August 2024. Thereafter, the positive obligation will cease, and casual conversion obligations will only be triggered if the employee initiates a ‘notification’ described below.

On or after 26 February 2025 (or 26 August 2025 in the case of small business employer), a casual employee may give their employer a written notification that they believe they are no longer a casual within the meaning of the FW Act and should therefore be offered permanent employment. This notice can only be given if the casual has at least 6 months’ service (or 12 months if they are employed by a small business employer) and their employer hasn’t refused to offer them conversion in the previous 6 months.

A new definition of casual employment will apply from 26 August 2024, which will allow consideration of the practical reality of the employment relationship, not just what was in the employment contract when the casual employee started working.

When assessing whether an employee has a firm advance commitment to continuing and indefinite work, employers and employees may consider whether:

• the employer can choose to offer (or not offer) work to the employee, and the employee can choose to accept or reject an offer of work;
• continuing work is reasonably likely to be available given the nature of the business;
• part-time or full-time employees are undertaking similar roles in the same workplace; and
• whether the employee has a regular pattern of work.

The existence of a regular pattern of work does not itself indicate a firm advance commitment to continuing and indefinite work. No single consideration is determinative of whether an employee is a casual.

What must an employer do when receiving a notification?

When the employer receives a notification from a casual, they must respond in writing within 21 days stating whether they accept or reject the notification. Before giving a response, the employer must consult with the employee about the notification.

The employer can reject the notification on fair and reasonable operational grounds. This can include the fact that converting the casual to part-time or full-time employment would:

• require substantial changes to the way in which work in the employer’s enterprise is organised;
• result in significant impacts on the operation of the employer’s enterprise; and/or
• require substantial changes to the employee’s terms and conditions to ensure compliance with an award or enterprise agreement, e.g. provisions imposing minimum daily or weekly hours of work or a regular pattern of hours.

The Fair Work Commission (FWC) will be able to resolve disputes, including by arbitration as a last resort.

When will a casual convert?

A casual employee will not become a permanent employee, even if they no longer fit within the FW Act definition unless:

• the employee and employer agree to status change under the new employee choice pathway described above;
• the FWC resolves a dispute by ordering that the employee be treated as permanent;
• the employee and employer agree to status change under processes set out in an applicable award or enterprise agreement; or
• the employee and employer otherwise agree to change status.