The ‘employee choice pathway’ which enables eligible casual employees to request conversion to permanent full-time or part-time employment has now been in force for over a month. Medium and large businesses commenced the new process as of 26 February 2025, small businesses have until 26 August 2025 to comply.

Designed to provide greater job security for casual employees, the move has already created 230,000 new permanent jobs. 9 out of 10 new jobs created under the Albanese Government have been permanent, with casual employment reducing to just 22% of the workforce.

For employers who have historically employed casual workers, this is a transformational shift.

So, what do employers need to know to remain compliant?

How is casual employment now treated?

The definition of casual employment, amended in August 2024, now considers the actual working patterns and hours of employees, not just the initial agreement.

This shift focuses on the reality of the working relationship, examining factors like regular hours and ongoing work schedules.

The goal of the reforms is to address the issue of misclassification of employees as casuals, ensuring that workers receive their rightful entitlements.

What is the ‘employee choice pathway’?

The ‘employee choice pathway’ allows eligible casuals who would prefer to be permanent to request it. The pathway, now enshrined in the National Employment Standards (NES), replaces the previous casual conversion process and introduces a more structured approach.

Eligible employees must have worked with the company for at least six months (12 months for small businesses). They must genuinely believe they no longer meet the definition of a casual employee. They must submit their request for conversion in writing.

Employers can only refuse the request on "reasonable grounds," which include operational requirements or the organisational structure.

Employees hired before 26 August 2024, will remain casual under the previous legislative definitions. Within the ‘employee choice pathway’, these employees must refer back to the working arrangements at the commencement of their employment when determining if they no longer fit within the definition of casual employment. The new definition will automatically apply to employees hired after 26 August
2024.

How employers can remain compliant

To meet the new standards, employers should:

• Thoroughly review their existing casual employment arrangements to ensure compliance with the new definition and pathway.
• Establish clear policies and procedures for handling conversion requests, outlining the criteria for "reasonable grounds" for refusal.
• Maintain accurate records. Accurate record-keeping of employee working patterns is crucial for demonstrating compliance and justifying decisions.

For small businesses preparing for the 26 August 2025 transition, acting now is prudent. While the reform aims to provide greater job security for workers, it also places a greater onus on employers to
understand and comply with the new regulations - so starting early will ensure the process is as seamless as possible.

Proactive measures, including thorough reviews of existing arrangements and the development of clear policies, are essential for navigating these changes effectively. Consulting with an employment lawyer will also ensure full compliance and mitigate potential risks. By staying informed and seeking expert advice, employers can ensure a smooth transition and maintain a fair and compliant workplace.