Get ready – changes to casual conversion take effect in a week

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 made a number of reforms to casual employment and in particular, changes to casual conversion, which come into effect at the end of this month.

Old regime – Employer to offer conversion

Until 26 February 2025, employers have an obligation to offer conversion from casual to permanent employment after 12 months of service where certain criteria are met. As a result of Closing Loopholes No. 2, this responsibility will shift from employers to employees.

New "employee choice pathway"

From 26 February 2025, casual conversion will operate under an "employee choice pathway", which wholly replaces the current regime, dispensing with the need for an employer to instigate conversion to permanent employment.

Under the new pathway, a casual employee can give written notice to their employer to convert to permanent employment if they have:

• been employed for at least 6 months; and
• they believe they no longer meet the requirements of the new casual employee definition.

For small businesses, this change does not come into effect until 26 August 2025, and the employee must have been employed for 12 months prior, rather than 6 months.

In keeping with the new definition of "casual employee" introduced into the Fair Work Act by Closing Loopholes No. 2, an employment relationship is considered casual if:

• the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
• the employee would be entitled to a casual loading or a specific rate of pay for casual employees.

You have received a notice. Now what?

An employer who receives a notice of casual conversion must consult with the employee about their request and ensure a written response is provided within 21 days.

Where an employer accepts the proposed change, the written response must include whether the employee's classification will be full or part time, what the employee's hours of work will be and when their permanent employment will commence.

An employer can only refuse the change if:

• the employee still meets the definition of casual employee;
• there are fair and reasonable operational grounds for not accepting the notification, such as:
  • substantial changes would be required to the way in which work in the employer's business is organised;
  • there would be significant impacts on the employer's business operations; or
  • substantial changes to the employee's employment conditions would need to be made to ensure that the employer does not contravene a fair work instrument that would apply to the employee as a permanent employee; or
• accepting the change would mean the employer will not comply with a recruitment or selection process required by Commonwealth, State or Territory laws.

What are the options if the employer and employee simply cannot agree?

Where an employer and employee are unable to reach agreement as to whether permanent employment is appropriate and attempts to resolve the dispute at the workplace level are exhausted, the dispute can be escalated to the Fair Work Commission. While the Commission will initially seek to resolve the dispute by informal means, the Commission can arbitrate the dispute and a binding decision can be made.