Award and wages

Casual conversion: do I have to make my casual staff permanent?

Not automatically, but you must answer an employee choice notification in writing within 21 days, and the Fair Work Act gives you only three grounds to refuse it.

Skai Solutions read this one out of the Act itself rather than the summaries, because the deadline is the part operators miss and almost nobody leads with it. Below: what missing the 21 days costs, why hospitality gets more of these notifications than any other industry, the three refusal grounds in full, and four pieces of housekeeping that stop the problem arriving.

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What does getting this wrong actually cost you?

The expensive part is not the conversion. It is the 21 days.

Section 66AAC of the Fair Work Act requires an employer who receives an employee choice notification to give a written response within 21 days after the notification is given. Not within a reasonable time, not when the roster calms down. Twenty one days, in writing. If you let it sit in the pile with the supplier invoices because February is February, you have missed a statutory deadline on a matter that has a dispute pathway attached to it, and you have missed it on paper, with a date on the notification proving when the clock started.

The second cost is the one that creeps. A casual on your books for two years who converts to part time stops attracting the 25% casual loading, which at the 1 July 2026 rates is between A$6.44 and A$8.03 an hour depending on classification. In exchange you start accruing annual leave, paid personal and carer's leave, notice and redundancy for that person. Whether that is cheaper or dearer depends entirely on how reliably you were rostering them anyway. For someone doing 30 predictable hours a week for two years, conversion is often close to cost neutral and occasionally cheaper. For someone you call in twice a month, it is not, and that is also the person least likely to be eligible.

Why does this keep landing on hospitality venues?

Because the pathway is aimed squarely at the pattern this industry runs on. A long serving casual with a regular roster is the exact employee the employee choice pathway was written for, and hospitality has more of them than any other industry the rules touch. If you run a venue with a core of casuals who have been on the same three shifts a week for eighteen months, you are not an edge case. You are the central case.

The timing also caught a lot of operators out. The pathway opened for small business employers on 26 August 2025, a year after it opened for everyone else, so a run of venues got their first notification in the back half of 2025 having never dealt with one. Small business employer has a specific meaning that turns on a headcount, and casuals are counted in a particular way, so check your own number with Fair Work rather than estimating it. The difference matters: section 66AAB requires at least 12 months of employment before a casual of a small business employer can give a notification, and at least 6 months if you are not a small business employer.

Do I have to make my casual staff permanent?

Not automatically, and not on request alone. The obligation is to respond properly, and you may decline on stated grounds. Section 66AAC allows an employer not to accept a notification on three grounds and three only:

Read what is not on that list. "We would rather keep the flexibility" is not a ground. "The loading is cheaper for us" is not a ground. These are fact-sensitive tests and a refusal has to be reasoned on the actual facts of that person's employment, which is why this page sends you to Fair Work for your own case rather than drafting your refusal for you.

Four things to do about it, cheapest first

None of these are legal advice. They are housekeeping, and the cheap ones are the ones that stop the expensive problem happening.

  1. Put a 21 day clock somewhere you will see it. Free. The single highest value thing on this list. Any written notification from a casual about becoming permanent goes straight into a dated reminder, because the deadline runs from the day it was given to you, not the day you read it.
  2. Pull a 12 month roster report on your casuals. Free if your point of sale or payroll will export it. You are looking for anyone who has been with you past the 6 or 12 month mark and whose hours look regular and systematic. That is your list of likely notifications, and knowing it before one arrives is the whole game.
  3. Price the two options for the three people most likely to convert. An hour's work. Take their actual hours over the last six months, run them at the casual rate with the loading and then at the part time rate plus accruals. Our page on casual against part time in hospitality sets out what changes, and the casual loading page covers what the 25% replaces. You will often find conversion is not the disaster it feels like.
  4. Fix the roster, not the classification. If a casual's hours have become a firm pattern because that is genuinely what the business needs, the honest answer is that the job is a part time job and has been for a while. Converting it is cheaper than defending the position that it is not.

What if none of those four work?

If a notification arrives and you believe you have genuine operational grounds, that is the point to get advice on the specific facts rather than reasoning from a web page. The Fair Work Pay and Conditions Tool will not decide a refusal for you, and this is not a question with a lookup answer. Two things are worth knowing before that conversation. First, the 21 days still runs while you are getting advice, so start the advice on day one and not day eighteen. Second, a refusal has to be given in writing with reasons, so a verbal "not right now" is not a response at all.

If the real problem is that you cannot carry permanent hours because trade is too uneven to roster against, that is a business problem wearing an employment law costume. It is worth looking at the staffing picture and at your labour cost percentage before concluding the flexibility is load bearing.

Where this page is not the right source

The part of this that is really a rostering problem

Strip the law out and the question underneath is simple. How much of your week is genuinely unpredictable, and how much of it only feels unpredictable because you have never had clean numbers on it?

Most venues find the trade is steadier than the staffing. What is actually volatile is the labour, because people call in sick, the phone rings through service, and the roster gets rebuilt on a Tuesday afternoon around whoever answers. A Skai Solutions AI phone agent takes every booking call into your system whether or not anyone is free to pick up, which gives you a forward book to roster against instead of a guess. It is live in five days. That does not answer a section 66AAC notification. It does make the question of how many hours you can commit to a less frightening one.

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Questions operators ask about casual conversion

Do I have to make my casual staff permanent?

Not automatically. You must respond in writing to an employee choice notification within 21 days under section 66AAC of the Fair Work Act, and you may decline on three stated grounds: the employee still meets the casual definition, there are fair and reasonable operational grounds, or accepting would breach a legally required recruitment process.

How long does an employer have to respond to a casual conversion request?

Twenty one days. Section 66AAC requires a written response within 21 days after the notification is given to the employer. The clock runs from when it was given to you, not from when you read it.

How long does a casual have to work before they can ask to convert?

At least 6 months under section 66AAB(c)(ii), or at least 12 months if the employer is a small business employer under 66AAB(c)(i). The period runs from the day employment started.

When did casual conversion change for small businesses?

The employee choice pathway started for small business employers on 26 August 2025, a year after it began for other employers. Small business employer has a specific headcount meaning in the Act, so confirm your own position with Fair Work.

Can I refuse casual conversion because I want to keep flexibility?

Wanting flexibility is not one of the grounds. Section 66AAC permits refusal only where the employee still satisfies the casual definition, where there are fair and reasonable operational grounds as the section describes them, or where accepting would breach a legally required recruitment or selection process.

What does a casual lose by converting to part time?

The 25% casual loading, which at the 1 July 2026 hospitality rates is between A$6.44 and A$8.03 an hour depending on classification. In its place they accrue annual leave, paid personal and carer's leave, notice and redundancy.

Does a refusal have to be in writing?

Yes. Section 66AAC requires a written response within the 21 days, so a verbal answer is not a response. The reasons belong in that written response.