From 26 August 2025 small businesses will have access to the ‘employee choice pathway’ where eligible casual employees can request a change to permanent employment. We take you through the changes.
If you’re a business owner, you’re likely aware of the changes that have been reshaping casual employment this year.
On 26 August 2024, as part of the Closing Loopholes legislation, changes were introduced to the Fair Work Act 2009 (FWA) to formally define casual employment.
At the same time, the FWA allowed eligible casual employees to request a change to permanent employment in the future. This change could be to part-time or full-time permanent employment, depending upon the pattern of work performed as a casual employee. For most businesses, this change provision occurred on 26 February 2025.
Now the next round of changes are due to take effect from 26 August 2025, where small businesses (with less than 15 employees) will have access to the ‘employee choice pathway’ – meaning requests for conversion from casual to permanent employment can be made by employees.
Of course, employers still retain the option to offer permanent employment independently, without needing the employee to initiate a request using this pathway.
What will the new process look like?
The thought of switching casual staff to permanent employees can feel overwhelming, and Source provides expert assistance with navigating these changes. However from a practical perspective, there are five main steps in the new process.
Step 1: Making a notice
The casual employee makes a notice in writing to their employer, stating their desire to be made either a full-time or part-time permanent employee.
Step 2: Assessing eligibility
The casual employee can request permanent employment if:
- they have been employed for at least six months (12 months if employed by a small business)
- they believe they no longer meet the requirements of the casual employee definition.
However, a casual can’t provide a notice if:
- they are currently engaged in an ongoing dispute with their employer about changing to permanent employment under the employee choice pathway, or
- in the last six months, their employer refused a previous notice or they’ve resolved a dispute with their employer about employee choice under a relevant dispute resolution process.
Further to that, casuals employed before 26 August 2024, also can’t provide notice if in the last six months:
- they’ve refused an offer from their employer to convert to permanent employment
- their employer has told them in writing that they won’t be making an offer of casual conversion, or
- their employer has refused a previous request for casual conversion.
Step 3: Consultation
Employers must meet with the casual employee to consult prior to responding to the notice. This consultation should cover details of what will change if the employer accepts the notice and the employee is no longer a casual employee.
This includes taking the employee through: what their hours of work would be; if part-time, what their work pattern would be; the change from an hourly wage to an annual salary; the different leave entitlements for permanent employees; and how termination and redundancy may apply. If the employee is to be made permanent, let them know when these changes would take place.
Step 4: Responding
Employers must respond to the employee’s request within 21 days of receiving the notice. If accepting the change, the employer’s written response must include information about:
- what the new employment status will be (full-time or part-time)
- the employee’s new hours of work
- when the change will take effect.
The change will take effect from either the first day of the employee’s first full pay period starting after the employer gives their response, or another date if agreed between the employer and the employee.
If rejecting the change, the employer’s written response must include the reasoning behind the decision. Reasons can only be any of the following:
- The employee still meets the definition of a casual employee.
- There are fair and reasonable operational grounds for not accepting the notification, such as:
- substantial changes would be required to the way work in the employer’s business is organised
- there would be significant impacts on the operation of the employer’s business, or
- substantial changes to the employee’s employment conditions would be necessary to ensure the employer doesn’t break rules (such as in an award or agreement) that apply to the employee.
- Accepting the change would mean the employer won’t comply with a recruitment or selection process required by law.
Step 5: Disputes (ideally, this is an optional step)
Usually disputes can be nipped in the bud by following the consultation step. More often than not, employer and employee can come to an agreement if the issue is addressed quickly and respectfully. In the instances where a solution can’t be agreed upon, both employers and employees can seek further help from the Fair Work Commission.
Need tailored help for your small business?
If you’d like additional help with the casual conversion process, our expert team can provide tailored advice. Find out more about Source’s HR services, or contact us today.
