Ahead of a report into the latest Closing Loopholes legislation, we ask an expert lawyer to explain the casual conversion rules in their current form.

A recent review into the 2024 Closing Loopholes legislation, the results of which are due to be released soon, attempted to assess how changes to the definition and treatment of casual work have affected employers so far.

Submissions to the review made clear that many employers and HR practitioners remain unsure of what the legislation requires of them, particularly in terms of casual conversion obligations.

“The legislation essentially flipped casual conversion on its head,” says Brenna Mackay, senior associate at Snow Legal. “It’s not surprising that some people are unclear on what is required.”

The Closing Loopholes review is unlikely to trigger more legislative changes in the short-term, Mackay notes, giving HR practitioners time to understand the current regime. Below, she unpacks the casual conversion rules in their current form.

AHRI members can access AHRI’s 2025 research paper, exploring employers’ sentiment towards some of the Closing Loopholes changes here. 

1. Are employers still obliged to initiate casual conversions?

No. Prior to the 2024 amendments, the onus was on the employer to initiate a casual conversion process after a certain period if particular conditions were met – but that has changed. 

“Casual conversion is no longer defined as an employer obligation,” says Mackay. 

“It’s now an employee right.” 

That means the onus is on the employee to make a casual conversion request, she says, following the steps laid out in the act’s Employee Choice Pathway, if they’ve met the qualifying criteria.

“In essence, it means employers no longer need to be as proactive about casual conversion,” Mackay says.

2. Are all casual employees entitled to make casual conversion requests?

No. This process occurs underneath the Fair Work Act, so it only applies to employees whose employment is covered by that Act, says Mackay.

The vast majority of employees in Australia are covered by the Act, but there are exceptions, including public sector employees in some states.

Minimum employment periods also apply, says Mackay. 

“If you work for a small business, you need to have been employed for 12 months before being eligible to make a request. For larger employers, the period is six months.”

3. Is there a standard definition of casual employment that conversion requests can be judged by?

No, there is no standard definition.

“There are a number of elements that you can consider that are set out in the legislation, but none of them are determinative on their own: they just help to weigh the scales one way or the other,” says Mackay. “That’s why so many disputes arise in this area.”

The Employee Choice Pathway allows employees to initiate a request to change to permanent employment if they consider that they no longer meet the definition of a ‘casual employee’.

The new definition of casual employment looks at the practical reality of the relationship rather than the contract alone, and the key test is whether there is an absence of a firm advance commitment to continuing and indefinite work.

Factors that an employer should consider when assessing whether an employee meets the definition of a casual under the legislation include:

• Whether there is an ability for the employer to offer or not offer the work;
• Whether there is an ability for the employee to accept or reject the work;
• Whether the casual employee is performing the same kind of work in a similar way to part-time or full-time employees;
• Whether there is a regular pattern to the employee’s working hours.

In many instances, employers can ascertain whether a casual can and should be converted by assessing the impact of their absence, Mackay says. “If you’re thinking:

‘That casual employee not accepting their shift next week would be a real problem for us,’ chances are they might not meet the definition of a casual.”

“If you work for a small business, you need to have been employed for 12 months before being eligible to make a request. For larger employers, the period is six months.” – Brenna Mackay, senior associate at Snow Legal

4. What are an employer’s obligations once a casual conversion request has been submitted?

Employers must respond to a casual conversion request in writing within 21 days of the request being received, says Mackay.

“There has to be a clear statement about whether the request is accepted or not, and there are different pathways depending on that response.”

If an employer agrees to the request, they are obligated under the legislation to consult with the employee about what their future employment will look like. 

“That includes whether it will be full-time or part-time, what their regular hours of work will be and when the change to permanent employment will take place,” Mackay says.

If an employer rejects the request, they must provide an explanation in their written response to the employee. From here, the employee may choose to raise a dispute, which will require the employee and employer to attempt to resolve the concerns themselves first. If the dispute remains, then ultimately the employee can take the matter to the Fair Work Commission.

5. On what grounds can an employer refuse a casual conversion request?

The primary reason allowed under the legislation is ‘fair and reasonable operational grounds’. “This is quite a vague concept, but essentially it means an employer can argue the nature of their business does not support permanent employment for that role,” says Mackay.

Scenarios that could qualify as reasonable operational grounds include:

• The employer is engaged in seasonal work, such as agriculture;
• The employer is in the events or tourism sector and must contend with fluctuating demand;
• The employer’s contract with a client is coming to an end and the work the casual employee is undertaking will soon cease to exist;
• The employee is covering for an employee on parental leave.

“Scenarios that are unlikely to meet the definition of reasonable operational grounds are things like preferring to have flexibility with your workforce, or to avoid setting a precedent for other staff,” says Mackay.

The employer can also refuse a request if they consider that the employee still meets the definition of a casual.

6. Does a casual conversion request create any risks for the employer?

Mackay stresses that requesting casual conversion is now an employee right, which means employers must not penalise employees for making such requests. Reducing an employee’s hours, denying them benefits or refusing to engage with their conversion request are all situations employers should avoid, says Mackay, as they may contravene an employee’s general protections. 

“In short, any adverse action that’s carried out as a result of an employee exercising their workplace right can get the employer into trouble.”

🧰 HR’s career resource toolkit

• Article:What came out of the Closing Loopholes review?
  
• Article: How casual work could evolve as a result of current legislation reviews
• Learning: Take your employment law expertise to the next level with AHRI’s Advanced HR Law course, or ensure you’ve got your bases covered with this introduction course.
• Podcast: Stay across Australia’s evolving employment law landscape with AHRI’s ER/IR Unpacked podcast.

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