Employee Choice Pathway – Casual to Permanent Conversion

From 26 August 2025, small business employers, with 15 or less employees, will need to comply with the Employee Choice Pathway introduced under the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 (Cth). This reform provides eligible casual employees with the right to formally request conversion to permanent employment.

The aim of this new pathway is to give employees greater certainty in their work arrangements while ensuring employers have clear obligations for managing such requests. Many construction businesses operate with a mix of casual and permanent staff, so understanding these requirements is critical for compliance and minimising disputes.

What is the Employee Choice Pathway?

The Employee Choice Pathway allows a casual employee to request conversion to permanent employment, either full-time or part-time, if they believe they no longer meet the statutory definition of a casual employee under section 15A of the Fair Work Act 2009 (Cth) (‘FWA’).

Under the FWA, the general rule is that an employee is considered casual only if;

• there is no firm advance commitment to continuing and indefinite work, and
• the employee receives a casual loading or specific casual rate under an award, agreement, or contract.

The employee will remain a casual employee until a specified event occurs, which is defined as:

• The employee’s employment status is changed to full-time or part-time;
• The employee’s employment status is changed by an order of the Fair Work Commission or a Fair Work instrument like an enterprise bargaining agreement;
• The employee accepts an offer of employment by the employer for an alternative employment arrangement.

Casual Conversion Process

1. Employee Notice

The new casual conversion process requires an employee to notify the employer if the employee believes that the definition of ‘casual employee’ no longer applies.

To be eligible;

• a casual employee must have been employed by the business for at least 12 months, or
• they must believe they no longer meet the requirements of the causal employee definition above.

If eligible, the employee can submit a written request to the employer for conversion.

2. Employer Response

The employer must respond to the employee’s request to convert, in writing, within 21 days of receiving the request.

If accepted, the written response must include;

• 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 (changes must take effect from the first day of the employee’s first full pay period starting after the employer gives their response, unless the employee and employer agree to another day)

If refused, the employer must still respond to the request within the required timeframe. The written response must include the reasons for the decision, which may be

• 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
  • substantial changes to the employee’s employment conditions would be necessary to ensure the employer doesn’t break rules (such as in an awardor 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

3. Exceptions

Please also note that casuals cannot provide 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 6 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, casuals employed before 26 August 2024, also can’t provide notice if in the 6 months prior to the date;

• 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.

Dispute Resolution

If disagreement arises about a request for conversion, the parties should first attempt to resolve the matter at the workplace level. If this does not succeed, either party may refer the dispute to the Fair Work Commission. The Commission can deal with the matter through conciliation, and in some circumstances arbitration, depending on whether both parties agree or if the applicable award or enterprise agreement provides otherwise.

Practical Steps

Small businesses in construction often rely heavily on casual labour, particularly where projects are seasonal or short-term. These changes therefore increase compliance obligations for employers and place greater emphasis on accurate recordkeeping.

Employers should:

• Regularly review casual arrangements to ensure they continue to meet the legal definition.
• Maintain accurate records of employment contracts, service periods, rosters, and work patterns.
• Update workplace policies and procedures to reflect the new conversion requirements.
• Train managers and supervisors to handle conversion requests correctly and within the 21-day timeframe.

By preparing in advance, through updated policies, careful recordkeeping, and training, employers can reduce the risk of disputes and ensure compliance with their obligations.

For any questions relating to your workplace obligations, please contact the Master Builders ACT Workplace Relations team at:

📞 (02) 6175 5900​
📧 workplace@mba.org.au