Casual Conversion Explained – The Complete Employers Guide

“Casual conversion” is the process under which casual employees are offered or have a right to request conversion to become a full-time employee or a part-time employee in Australia. The National Employment Standards in the Fair Work Act sets out the process for employers to make casual conversion offers, as well as casual employees’ right to request casual conversion. This guide simplifies and explains those processes.

These rights apply to all casual workers in Australia who have been employed for 12 months. They are expected to replace modern award clauses, as the Fair Work Commission reviews them in 2021.

The arrows in the above workflow represent paths in the casual conversion process. Some of those paths may never be taken (e.g. an employee may never make exercise their right to request conversion) and we have represented these with dotted lines. Solid lines represent paths and processes where one option must be undertaken.

Employer Assessment Without Employee Request

Once a casual worker has been employed for 12 months, Australian employers who are not small businesses are required to assess them for casual conversion (i.e. whether their employment can be converted to full-time employment or part-time employment). This step does not apply to small business employers (employers with 15 or fewer employees). Small business employers can skip straight to employee right to request casual conversion.

When to make an offer for conversion to permanent employment

• The casual employee has been employed for 12 months.
• The casual employee has worked a regular pattern of hours on an ongoing basis for the last 6 months.
• The casual employee could keep working those hours as a permanent employee without significant changes.
• There are no reasonable grounds to not make an offer.

Tips for telling when a casual employee has worked a regular pattern of hours on an ongoing basis for the last 6 months

• Start by looking at patterns in the hours the employee actually worked.
• Patterns in the employee’s working hours can appear in different ways. Some examples are:
• total hours per week: Did the employee work a similar number of hours in total every week?
• total hours per day: Did the employee work a similar number of hours in total on specific days of the week?
• specific hours per day: Did the employee work specific days of the week with similar start and finish times.
• Do the employee’s hours of work look similar to:
  • the hours that your permanent employees are working;
  • the hours that a permanent employee is entitled to under your award or enterprise agreement? Especially if you have flexibility under your award or agreement about when your permanent employees work, provided you roster them for a minimum number of hours they must be rostered for.  

Some deviation from the regular pattern of hours won’t mean that the employee didn’t have a regular hour pattern. Read our dedicated guide on identifying regular patterns of work for more information.

Tips for telling when a casual employee could keep working those hours as a permanent employee without significant changes

Look at the employee’s roster. A regular pattern of hours in the employee’s roster that matches a pattern in their working hours would strongly indicate that the hours could be worked permanently.

When will I have reasonable grounds to not make an offer?

If all of the above conditions are met, then the employee should be made an offer for casual conversion unless there are reasonable grounds to not make the offer. Below are some hypothetical situations where an employer may have reasonable grounds to not make an offer.

What if the employee’s position will cease to exist in the next 12 months?

If you know, or reasonably foresee, that the employee’s role will not exist in the next year, that would be a reasonable ground to not make an offer to convert. There are many reasons why the employee’s role might not exist in that time (e.g. changes to business structure, changes to customer preference, business closure, sale of business).

Will the employee’s total hours of work significantly reduce?

It will be a reasonable ground to not make an offer to convert if you know, or reasonably foresee, that the employee’s hours of work will significantly fall in the next 12 months.

Will the employee’s regular pattern of work significantly change?

If the days or times that the employee is required to work will significantly change, then this will be a reasonable ground to not make an offer but only if you can’t accommodate this change within the employee’s available hours.

Uncertainty around COVID-19?

We expect that many employers will rely on the significant uncertainty arising from the COVID-19 pandemic as a reasonable ground for not making an offer to convert to permanent employment.

Do I need reasonable grounds to not make an offer if my employee doesn’t have a regular pattern of work?

Technically no. However, if you do have reasonable grounds to not make an offer, you should consider giving those grounds in your notice to the employee. This is because if you give the employee reasonable grounds for not making an offer, then the employee cannot make a request to convert to permanent employment for the next six months.

Offers to convert

If you decide that the employee has met the conditions for conversion, then you have 21 days from the 12 month anniversary of their start date to make them a written offer to convert to permanent employment.

The offer must be to convert to:

• full-time employment if their regular pattern of hours has been the equivalent of full-time hours;
• part-time employment if their regular pattern of hours has been the equivalent of part-time hours.

Employees have 21 days to accept the conversion offer. If they don’t accept the offer in that time, then you can assume that they have refused the offer.

Use a templated letter of casual conversion to formally make offers of conversion to your employees.

Notice that you are not making an offer

What to include in your notice

If you decide that the employee has not met the conditions for conversion, then you have 21 days from the 12 month anniversary of their start date to write to them about that.

You can only avoid making the offer if the employee hasn’t met one of the conditions. The notice must tell them:

• You aren’t offering them casual conversion.
• The reasons why you aren’t offering them conversion (e.g. they haven’t worked a regular pattern of hours and/or your reasonable grounds not to make an offer).

Technically you do not need reasonable grounds to not make an offer if the employee has not worked a regular pattern of hours. However, if you do have reasonable grounds to not make an offer, you should consider giving those grounds in your notice to the employee. This is because if you give the employee reasonable grounds for not making an offer, then the employee cannot make a request to convert to permanent employment for the next six months.

Record keeping

Keep a copy of:

• the employee’s hours of work;
• any offer to convert to permanent employment;
• any notice that you are not making an offer to convert;
• evidence supporting your decision, either way (e.g. the employee’s hours of work, evidence about reasonable grounds, etc);
• the employee’s acceptance or rejection of the offer.

Employee Requests for Conversion

Once a casual employee has been employed for 12 months, they can make a request to their employer that they convert to permanent employment.

When can a casual employee make a conversion request?

• The casual employee has been employed for 12 months (plus 21 days for employers who are not small businesses).
• The casual employee has worked a regular pattern of hours on an ongoing basis for the last 6 months
• The casual employee could keep working those hours as a permanent employee without significant changes

When can a casual employee not make a casual conversion request?

Even if they meet the above requirements, a casual employee cannot make a request to convert if any of the following occurred in the last six months:

• They have refused an offer from you to convert to permanent employment.
• You gave them notice that you would not offer them conversion to permanent employment because you had reasonable grounds not to make an offer.
• You refused another request from the employee to convert to permanent employment.

When can you reject a casual conversion request?

• The employee has not been employed for 12 months (plus 21 days for employers who are not small businesses).
• The employee has not worked a regular pattern of hours on an ongoing basis for the last 6 months.
• The employee could not keep working those hours as a permanent employee without significant changes.
• In the last six months:
• They have refused an offer from you to convert to permanent employment.
• You gave them notice that you would not offer them conversion to permanent employment because you had reasonable grounds not to make an offer.
• You refused another request from the employee to convert to permanent employment.
• There are reasonable grounds to not make an offer.

Responding to a request for casual conversion

You need to respond in writing to all casual conversion requests. You have 21 days to respond. Before you respond, you must consult with the employee about the request and your likely response.

If you are refusing the request, you must set out your reasons for doing so.

If you are granting the request, you must set out:

• Whether the employee is converting to full-time employment or part-time employment.
• The employee’s hours of work after the casual conversion takes effect.
• The day the employee’s conversion to full-time employment or part-time employment takes effect. Unless you agree another day with the employee, this must be the first day of the employee’s next full pay period.

Disputes and Enforcement

The Fair Work Ombudsman is responsible for enforcing casual conversion laws. Disputes between employers and employees will be dealt with under modern award or enterprise agreement clauses, and by the Federal Circuit Court in some cases.

More about casual employment and conversion

These laws were introduced by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021. The Fair Work Amendment Right to Request Casual Conversion Bill 2019 lapsed when parliament dissolved in 2019.

The Fair Work Act was amended at the same time to include a definition of casual employment. Under the Fair Work Act, a person is a casual employee of an employer if:

1. an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
2. the person accepts the offer on that basis; and
3. the person is an employee as a result of that acceptance.

The Fair Work Commission’s casual conversion clauses are being reviewed. Modern award casual conversion clauses are expected to be removed from the modern awards.