The new casual employee choice pathway

From 26 February 2025, a new casual employee choice pathway is available for most employees that assists them transition to permanent employment.

For small business employers (ie who employ less than 15 employees), the pathway is available from 26 August 2025.

Get started with Lixo AI to ask questions about the new casual employee choice pathway for free, 24/7.

What is the new casual employee choice pathway?

The new casual employee choice pathway is part of the NES and assists casual national system employees to transition to permanent employment.

The pathway is set out in Part 2-2 Division 4A of the Fair Work Act.

Who can make a casual choice notice under the casual employee choice pathway? 

A casual employee can provide written notice to their employer to change to permanent employment under the casual employee choice pathway if:

1. The casual employee has been employed for at least 6 months (or employed for at least 12 months if employed by a small business employer), and
2. The casual employee believes they are no longer a casual employee as defined in section 15A of the Fair Work Act.

A casual employee cannot provide notice to their employer to change to permanent employment under the employee choice pathway if:

1. The casual employee is engaged in an ongoing dispute with their employer about changing to permanent employment under the employee choice pathway, or
2. In the prior 6 months, either the casual employee’s employer refused a previous notice or they’ve resolved a dispute with their employer about employee choice under a dispute resolution process.

What’s a casual employee under the new definition in section 15A of the Fair Work Act?

From 26 August 2024, an employee is only a casual employee if:

1. There is no ‘firm advance commitment to continuing and indefinite work’, and
2. They are entitled to a casual loading or a specific rate of pay for casuals under a fair work instrument or their employment contract.

What’s a ‘firm advance commitment to continuing and indefinite work’?

To assess if an employee has a ‘firm advance commitment to continuing and indefinite work’, the real substance, practical reality and true nature of the employment relationship must be considered.  As part of that, the following must be assessed:

1. If the employer can choose to offer or not offer work, and whether the employee can choose to accept or reject work (and if that actually happens)
2. If it is likely there will be future continuing work available, considering the nature of the business
3. If permanent employees perform the same kind of work that the employee usually performs, and
4. If the employee performs a regular pattern of work.

A firm advance commitment can be found in the employment contract, or in a mutual understanding or expectation between the employer and employee.

How should employers respond to a casual choice notice?

If an employer receives a valid casual choice notice to change to permanent employment, the employer must first consult with the casual employee.  

How can an employer accept a casual choice notice?

To accept a casual choice notice, the employer must:

1. Discuss if the employee will be full-time or part-time, what their hours of work will be, and when the change will take effect. 
2. Inform the casual employee in writing within 21 days that it accepts the casual choice notice.  
3. Set out in the written response if the employee will be full-time or part-time, what their hours of work will be, and when the change will take effect.

How can an employer reject a casual choice notice?

To reject a casual choice notice, the employer must:

1. Inform the casual employee in writing within 21 days that it rejects the change in the casual choice notice.
2. Only reject the casual choice notice on the basis that:
   1. The employee is still a casual employee under section 15A of the Fair Work Act
   2. Accepting the change would contravene a recruitment or selection process required by law, or
   3. There are fair and reasonable operational grounds for rejecting the notice.
3. Set out the ‘fair and reasonable operational grounds’ for rejecting the casual choice notice in the written response. 

What are ‘fair and reasonable operational grounds’ for rejecting a casual choice notice?

Fair and reasonable operational grounds for rejecting a casual choice notice include:

1. Substantial changes to the way work in the employer’s enterprise is organised would be required
2. There would be significant impacts on the operation of the employer’s enterprise, or
3. Substantial changes to the employee’s employment conditions would be reasonably necessary to ensure the employer doesn’t contravene an applicable fair work instrument (such as a modern award or enterprise agreement).

When does a change from casual to permanent employment take effect?

A change from casual employment to permanent employment takes effect from the first day of the employee’s first full pay period starting after the employer gives its written response, unless the employee and employer agree to a different day – see section 66M of the Fair Work Act.

What are the transition timeframes?

The transitional timeframes for the old casual conversion and the new casual employee choice pathway are:

• The casual conversion provisions will cease applying to small business employers on 25 August 2025.
• The casual conversion provisions will cease applying to employers that are not small business employers (ie they employ 15 or more employees) on 25 February 2025.
• An eligible casual employee of a small business employer who was employed prior to 26 August 2024 can issue a casual choice notice under the casual employee choice pathway from 26 August 2025.
• An eligible casual employee of an employer that is not a small business employer who was employed prior to 26 August 2024 can issue a casual choice notice under the casual employee choice pathway from 26 February 2025.

Would you like assistance?

Lawlux has considerable experience working with employers to manage compliance with the NES and the casual employee choice pathway.

If you would like to discuss your situation or require assistance, please contact us or get started with Lixo AI.