In 2024 and 2025 significant legislative changes were and will be implemented in Australia’s casual employment landscape, significantly impacting both employers and employees. These reforms aim to provide greater job security and clarity for casual workers, which make up roughly 20% of the Australian workforce.
New definition of casual employment
On 26 August 2024 a new definition of casual employment was introduced in Australia.
The new definition states that an employee is casual if:
- there is no firm advance commitment to ongoing and indefinite work, when considering factors like the real substance and nature of the employment relationship; and
- the employee is entitled to a casual loading or a specific casual pay rate under their employment contract or a fair work instrument.
This change means that employers can no longer solely rely on the terms of a contract to classify an employee as casual. Instead, they must consider the actual nature of the employment relationship. This shift aims to ensure that employees are correctly classified and receive appropriate benefits based on their work arrangements.
Introduction of the Employee Choice Pathway
The Employee Choice Pathway was implemented in larger businesses (over 15 employees) on 26 February 2025, and will be implemented in smaller businesses (under 15 employees) on 26 August 2025. This change allows eligible casual employees to request conversion to full-time or part-time employment if they believe their work arrangements no longer fit the definition of casual employment.
This change replaced the old “casual conversion” system, which previously required employers to offer permanent employment to eligible casual employees after they had worked for 12 months and had a regular pattern of hours. Under the casual conversion system, employers had to assess whether a casual employee’s work pattern was consistent enough to be converted to full-time or part-time employment, and they were obligated to make an offer within 21 days of the employee’s 12-month anniversary if certain conditions were met.
The new Employee Choice Pathway shifts this responsibility to the employees, allowing them to request conversion to full-time or part-time employment if they believe their work arrangements no longer fit the definition of casual employment. To be eligible, employees must have worked for at least six months (or 12 months for small businesses) and believe they no longer meet the casual employee definition. This new pathway gives casual workers more control over their employment status and provides a clearer path to permanent employment.
Process for conversion requests
The employee provides a written notice to their employer requesting a shift to permanent status. The employer must respond in writing within 21 days, either accepting or refusing the request. Employers can refuse the request if the employee continues to meet the casual employee definition, operational reasons make conversion impractical, or accepting the request would breach applicable laws or agreements.
Implications for businesses
- Policy updates
Employers must review and update their HR policies to reflect the new Employee Choice Pathway, to ensure clarity on employee rights and employer obligations.
- Training and awareness
Businesses should educate their HR teams and managers about the changes to ensure compliance and prevent misunderstandings.
- Strategic planning
Employers should consider the potential impact on workforce planning and budgeting, as more employees may opt for permanent roles.
The recent changes to casual employment in Australia mark a significant shift in how casual workers are treated under Australian law. By understanding and catering for these changes, employers can maintain compliance and foster a more stable and engaged workforce.