Startups lean on casuals for the same reason they lean on contractors: headcount flexibility before the revenue is predictable. Weekend support staff, campaign-driven sales reps, the ops hire “until we know if this sticks”. The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 rewired the legal framework underneath all of it — a new statutory definition of casual employment and, since 26 February 2025, an employee choice pathway that puts conversion to permanent employment in the employee’s hands, on a 21-day clock that startups keep missing.
The Definition Moved First
Since 26 August 2024, section 15A of the Fair Work Act 2009 (Cth) defines a casual as an employee whose relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work, and who is entitled to a casual loading (or a specific casual pay rate) under their award, agreement or contract.
The pre-2024 position — locked in by the High Court in WorkPac Pty Ltd v Rossato [2021] HCA 23 and the 2021 amendments — was that the written contract at commencement essentially settled the question. No longer. Whether a firm advance commitment exists is now assessed on the real substance, practical reality and true nature of the relationship as it actually runs, including whether the employee can genuinely accept or reject shifts, whether future work of the same kind is reasonably likely, and whether permanent employees are doing the same work alongside them. A regular pattern of work doesn’t by itself make someone permanent — the section’s note says so expressly — but a casual whose “flexibility” exists only on paper is exactly who this definition was written for.
For startups the practical consequence is that a well-drafted casual contract is necessary but no longer sufficient. If your “casual” customer support lead has worked the same four weekday shifts for a year, is rostered without being asked, and would obviously be replaced if they declined a shift, the label is at risk — with everything that follows for leave, notice and redundancy entitlements.
The Employee Choice Pathway
The old regime — where employers had to offer conversion at 12 months, and residual request rights sat mostly unused — is gone. Under Division 4A of Part 2-2, the initiative now belongs to the employee:
- A casual employed for at least 6 months (12 months for a small business employer — fewer than 15 employees, counting regular casuals and treating associated entities as one employer) can give written notification under section 66AAB that they believe they no longer meet the section 15A definition and want to convert to full-time or part-time employment.
- Notifications have been available since 26 February 2025 for most employers, and since 26 August 2025 for small business employers.
- An employee can’t notify while a dispute with the employer about the operation of the conversion Division is being dealt with, or within 6 months of a refusal or a resolved dispute.
Nothing forces an employee to convert, and — via the anti-avoidance rule in section 66L — nothing lets an employer cut hours, reshuffle patterns or terminate someone to head a notification off. Giving a notice is also a workplace right, so adverse action over it is a general protections claim waiting to happen.
Your 21 Days
Once a notification lands, section 66AAC gives the employer a tight script. You must consult with the employee first, then give a written response within 21 days that either:
- Accepts — stating whether the employee becomes full-time or part-time, their hours of work, and the day the change takes effect (the first day of the employee’s first full pay period after the response, unless you agree otherwise); or
- Declines — which is only lawful on narrow grounds: the employee still meets the section 15A definition; there are fair and reasonable operational grounds — including substantial changes to the way work is organised, significant impacts on the operation of the enterprise, or substantial changes to the employee’s terms that would be needed to comply with an applicable award or agreement; or accepting would breach a recruitment or selection process required by law. Reasons must be given in writing.
“We’d rather keep the flexibility” is not on the list. Nor is “casuals are cheaper” — and note that a converted employee’s loading stops prospectively; conversion doesn’t create back-pay, and for misclassification claims section 545A lets identifiable casual loading offset claimed permanent entitlements. If the response deadline is missed or the employee disputes a refusal, the matter goes first to workplace-level discussion and then to the Fair Work Commission, which can mediate, conciliate — or arbitrate and make binding orders, including an order that the employee is permanent.
The Traps Around the Edges
Three adjacent provisions catch startups that treat this as a paperwork exercise:
- Sham casual arrangements. New civil penalty provisions from 26 August 2024 prohibit dismissing — or threatening to dismiss — an employee in order to re-engage them as a casual doing the same or substantially the same work (section 359B), and knowingly making false statements to persuade a current or former employee onto a casual contract for substantially the same work (section 359C). They sit alongside the sham contracting rules and carry penalties of up to 300 penalty units per contravention for individuals — five times that for a body corporate — and a misleading “you’re just a casual” label still bites through the section 15A definition and the general protections, even without a dismissal in the picture.
- The Casual Employment Information Statement. Non-small-business employers must give the CEIS at commencement, then at 6 months, 12 months, and every 12 months after that; small business employers at commencement and 12 months. It’s a strict, dateable obligation that due diligence teams check.
- Misclassification compounding. A casual who was never really casual has been underpaid leave and other entitlements — and systematic underpayment now has a criminal dimension for intentional conduct, alongside the fixed-term contract limits that closed the other easy flexibility lever.
What to Actually Do
Audit the roster now, not at notification. For every casual past (or approaching) 6 months, ask the section 15A question honestly: could they really decline a shift? Would the business notice? If the answer makes you wince, price conversion into the plan before the employee prices it for you — permanent part-time with predictable hours is often cheaper than a 25% loading anyway.
Build the 21-day process before you need it. A notification inbox, a consultation script, a response template with the mandatory content, and a rule that no refusal goes out without the grounds written down and sanity-checked. Missed deadlines and improvised refusals are how a routine conversion becomes an FWC arbitration.
Keep the paperwork honest. Casual contracts should identify the loading separately, avoid promising fixed ongoing rosters, and match how the role actually runs. And when a notification arrives, resist every instinct to “restructure” the shifts first — section 66L was drafted for precisely that move.
This article is general information only, not legal advice — whether a particular employee meets the casual definition, and whether a refusal ground is available, turns on the facts of the relationship and your award or agreement. Viridian Lawyers advises Australian startups on employment, contractor and equity arrangements. If a conversion notification has landed — or your casual roster is overdue for the section 15A audit — get in touch before the 21 days run out.
