Converting a casual to permanent status

Converting a casual to permanent status

When is a casual employee not a casual? It’s a good question and one that all employers need to be asking themselves in light of the new award provision providing for the conversion of casual employees to permanent employment.

A recent Federal Court of Australia decision left the business community up in arms.

Why? Because the court turned it’s back on the long held view that casual employees are those who are engaged on a casual basis and are paid a casual loading instead of accruing certain entitlements of permanent staff (such as annual leave, personal/carer’s leave or paid public holidays.

The Federal Court labelled this view as simply wrong.

Instead, the court found that the determination of the proper nature of the relationship (i.e. as either casual or permanent) must be considered against “the real substance, practical reality and true nature of the relationship”, as opposed to adopting the description the parties themselves have given to the relationship.

Changes to modern awards support the court’s decision, with a new model term being inserted into both the Real Estate Industry Award and the Clerks – Private Sector Award.

Effective from 1 October 2018, employees are able to make a request to their employer to have their status converted from casual to permanent, subject to meeting certain criteria. An employee must have:

  • worked for the employer as a casual for at least 12 months; and
  • over the 12 months, worked a pattern of hours on an ongoing basis, without significant difference and that could continue to be performed as a full-time or part-time employee.

So what do you need to know as an employer? Here are the answers to some of the most burning questions.


What is casual conversion?

Casual conversion is the transfer of an employee’s employment status from “casual” to “permanent”. A model term setting out the rules of casual conversion has been inserted into both the Real Estate Industry Award and the Clerks – Private Sector Award.


When is an employee entitled to casual conversion?

To be eligible to request casual conversion, an employee must be a “regular casual employee” and must have worked:

  • for a period of 12 months or more as a casual; and
  • a pattern of hours on an ongoing basis that they could continue to perform as a full-time or part-time employee without significant adjustment.

For example, if a property manager is engaged as a casual and works an average of 38 hours per week over the course of 12 months, they’re eligible to become a permanent full-time employee. A casual property manager working an average of 24 hours in a regular pattern over 12 months is eligible to become a permanent part-time employee.


What about the 25% casual loading?

Casual employees receive a 25% loading as compensation for things they don’t receive, such as annual leave and personal/carer’s leave. If they elect to take on a full-time or part-time role, their minimum rate of pay will reduce by 25% because the loading is no longer payable.


Can an employer refuse to convert a casual employee?

Yes, but only if there are “reasonable grounds” to do so – and this can only occur after consultation with the employee. The grounds for refusal must be put in writing within 21 days of the request being made.

Reasonable grounds for refusal include:

  • That engaging the employee as a full-time or part-time employee would require a significant adjustment to the casual employee’s hours of work
  • That it’s known or is reasonably foreseeable that the regular casual employee’s position will cease to exist within the next six months
  • That it’s known or is reasonably foreseeable that the hours of work will be significantly reduced in the next 12 months
  • That it’s known or is reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months and this can’t be accommodated within the days and/or hours when the employee is available to work.


Can an employee challenge a refusal to grant casual conversion?

Yes, an employee can challenge any refusal by using the dispute resolution provision in the relevant award.


What records need to be kept?

Any request for casual conversion must be made in writing and if the request is granted, following a discussion with the employee, the employer must record the conversion in writing.


When will a request for casual conversion take effect?

If granted, conversion will take effect from the next pay cycle (unless otherwise agreed).


What should employers do now?

Employers must provide their casual employees with a copy of the new clause within 12 months of their first engagement or, in the case of existing casual employees, by 1 January 2019.

REEF has prepared a template letter to present to casual employees to help you meet your obligation to notify employees of the conversion rules.

It’s also advisable that agencies:

  • Establish new processes to ensure compliance with casual conversion clauses (e.g. diarise 12-month anniversaries for your casual employees) in order to avoid penalties for non-compliance
  • Ensure payroll systems are equipped to manage casual conversion requests (e.g. recognition of continuous service and change in pay rates.



If you have any questions, speak with a REEF Workplace Relations Advisor by calling 1300 616 170.


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About REEF

The Real Estate Employers' Federation is the real estate industry’s leading not-for-profit employer and workplace relations advisory association. It has more than 1600 members and subscribers across Australia.

Each year, REEF receives more than 20,000 calls from real estate employers needing help and guidance on matters affecting the employment relationship.

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