New Changes for Casual Employees: Moving to Permanent Employment

Introduction

One of the key reforms being implemented in the Australian workforce through the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) includes a change to casual employment rules. These changes took effect from 26 February 2025. However, for small businesses with fewer than 15 employees, these changes will come into effect on 26 August 2025.

Casual employees have long faced uncertainty and insecurity in their roles, with no guarantees for ongoing employment or the right to employee entitlements such as annual and personal leave.

These recent reforms now provide a clearer path for casual employees to secure permanent employment and the benefits it offers. Formerly known as casual conversion, employees can now take advantage of the new employee choice pathway.

This article will explore the details of these reforms and what they mean for employers and employees moving forward.

New Employee Choice Pathway Explained

As a result of the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth), from 26 February 2025, eligible casual employees will be empowered with the right to seek permanent employment with their employer.

Eligible casual employees are now entitled to provide their employer with written notice if they wish to change from their casual role to a permanent full-time or part-time role under the new employee choice pathway.

Of note is the fact that the employer can only refuse this request from the employee for specific reasons, granting the employee a significant amount of power in the workplace.

Eligibility Criteria for Casual Employees

Employees now have greater control over their employment, as they are responsible for utilising this reform, rather than the employer.

For a casual employee to be eligible, they must:

1. Have worked with the employer for more than six (6) months. If the employer is a small business (fewer than 15 employees), this period is extended to twelve (12) months. Note that any work performed by an employee before 26 August 2024 does not contribute to the employee’s eligibility;
2. No longer meet the definition of a casual employee, the definition of which has also changed under the reforms;
3. Not be currently engaged in an ongoing dispute with their employer about changing to permanent employment under the employee choice pathway; and
4. Not have had any previous notification over changing to permanent employment refused in the past six (6) months.

If the employee is eligible, they can provide written notice of their intention to transition to permanent employment. To assist, the Fair Work Ombudsman has provided an information sheet and notification template that employees can use, which can be found here.

Responding to a Notice

Upon receiving a notice from an employee, the employer must consult with the employee about their notice and discuss certain details of what will change for the employee if their notice is accepted and they transition to a permanent employee. These details will include whether the employee would be part- or full-time, what their hours of work would be and when the change would commence.

An employer must respond in writing within 21 days of receiving the notice, either accepting or rejecting the request.

If the employer chooses to accept the employee’s notice, they must provide written notice of the acceptance and include details of what their new employment status will be, their new hours of work and when the change will take effect. Specifically, the change must take effect from the first day of the employee’s first full pay period after the employer’s response is received or another day as agreed between the employer and the employee.

However, if the employer chooses not to accept the change, their written response must include the reasons for the refusal. An employer can only refuse the notice in certain circumstances, and the bar for refusal is high. Reasons for an employer to refuse the notice include:

1. The employee still meets the definition of a casual employee;
2. There are fair and reasonable operational grounds for not accepting the notification, such as:
3. Substantial changes would be required to the way work in the employer’s business is organised;
4. There would be significant impacts on the operation of the employer’s business; or
5. Substantial changes to the employee’s employment conditions would be necessary to ensure the employer is not in breach of any award, agreement or other regulations that apply to the employee; and
6. Accepting the notice would mean the employer won’t comply with a recruitment or selection process required by law.

This is a high standard. Employers cannot simply reject requests for convenience, as they could with casual conversion.

Employers can access an information sheet and a template response to the notice, prepared by the Fair Work Ombudsman here.

Conclusion

While the responsibility of utilising this reform lies with the employee who needs to provide notice if they wish to move to permanent employment, employers should prepare themselves and have systems in place. These systems will be necessary as the notice must be reviewed and responded to within 21 days to avoid penalties.

These changes provide casual employees with more security and greater control over their employment status. While challenges may arise during implementation, the reform represents a positive step toward creating a more stable and balanced work environment for all parties.

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