Demystifying employee entitlements following casual conversion

When can casual employees convert to permanent?

In general, under the National Employment Standards (NES) casual employees who have at least 6 months of service (or 12 months for employees of a small business) can notify their employer that they want to convert to full-time or part-time employment if they meet certain criteria. An employer receiving a notification under the NES must respond to the notification within 21 days and can only refuse to convert the employee to permanent on limited grounds.

What is ‘regular’ casual employment?

Some entitlements are only available to casuals who meet the definition of ‘regular casual employee’.

These entitlements include:

• Requests for flexible work arrangements
• Unpaid parental leave
• Eligibility to make an unfair dismissal claim

Each of these entitlements is considered in more detail below.

A casual employee is considered ‘regular’ under the Fair Work Act 2009 (FW Act) if they have been employed on a ‘regular and systematic basis’.

‘Regular and systematic’ is interpreted broadly so that a casual employee who is consistently given work will usually be a regular casual employee, even if their hours fluctuate from week to week or there are weeks where they do not work at all.

However, each situation must be considered on a case-by-case basis, so an employer or employee who is unsure whether the definition of ‘regular casual’ has been met should seek advice on the specific circumstances.

How do specific entitlements interact with casual service?

Notice of termination and redundancy pay

Under the NES, casual service does not count towards either notice of termination or redundancy pay. This means that an employee will only start to accumulate years of service for these entitlements from the date they convert from casual employment to permanent employment.

Annual leave and personal/carer’s leave

Casual employees are excluded from accruing annual leave and personal/carer’s leave under the NES. However, once a casual employee converts to permanent employment, they will start accruing annual leave and personal/carer’s leave progressively from that point onwards.

Long service leave

Long service leave laws in each state and territory allow casual employees to accrue leave. This means that a casual employee begins to accrue long service leave from the start of their employment, and their conversion to permanent employment will generally not impact their eligibility to accrue long service leave.

Eligibility to make an unfair dismissal claim

Before an employee can make an unfair dismissal claim, they must serve a minimum employment period of six months (or 12 months for employees of small businesses).

Under the FW Act, service as a regular casual employee counts towards this period.

The minimum employment period is set by the FW Act and cannot be extended or modified by a contract or other agreement with the employee.

This means that if an employer sets a new probationary period when an employee converts to permanent employment, this will not restart the minimum employment period for unfair dismissal eligibility.

It is therefore just as important for employers to manage performance and conduct of casual employees during the first six or 12 months of casual employment (as applicable) as for permanent employees.

Parental leave and requests for flexible working arrangements

Parental leave and requests for flexible working arrangements under the NES require a casual employee to have 12 months of service as a regular casual employee before they can access these entitlements.

Family and domestic violence leave

All employees, including casual employees, are entitled to 10 days of paid family and domestic violence leave per year under the NES.

Instead of accruing progressively like most other forms of leave, the annual entitlement of 10 days of family and domestic violence is granted to all employees in full when they first start employment. The 10 days are then refreshed on each anniversary of commencing employment. This applies equally to casual and permanent employees.

An employee’s work anniversary is calculated from their first day of employment, whether they started as a casual (regular or otherwise) or a permanent employee.

Permanent entitlements begin, but the casual loading ends

Once a casual employee converts to permanent employment, their entitlement to the casual loading ends.

For employers, employment costs post-conversion remain approximately the same because the 25% casual loading closely aligns with the value of the permanent entitlements that casual employees forego.

For some casual employees, the higher casual pay rate and flexibility in hours of work are more attractive than converting to permanent employment, so they choose not to request conversion. However, for others, the accrual of permanent entitlements is worth the reduction in take-home pay.

Key takeaways

• After conversion to permanent employment, employees begin accruing annual leave and personal/carer’s leave from the conversion date, while casual loading ceases and pay reflects permanent entitlements.
• Most permanent entitlements (such as annual leave, personal/carer’s leave, notice and redundancy) only start accruing from the date of conversion, but long service leave and unfair dismissal eligibility can count prior regular casual service.
• When conversion occurs, the casual loading stops and permanent entitlements begin, meaning overall employment costs are similar, but employees trade higher hourly pay for greater job security and leave benefits.
• The Fair Work Ombudsman’s website contains a range of free information about casual employment, conversion to permanent employment and employment entitlements.