Casual vs Permanent Employment Guide for Hospitality Employers

Last Updated on 31/07/2026 by Damin Murdock

Many hospitality businesses manage fluctuating seasonal or time-specific demands by relying on casual staff. On one hand, casual workers offer flexibility, but on the other hand this type of employment comes with strict legal requirements. Blurring the line between casual and permanent employment exposes businesses to disputes, and underpayment claims could lead to reputational damage. 

At Leo Lawyers, we know how important it is for hospitality operators to understand the rules, and that’s why we prepared this guide explaining the differences between casual and permanent staff and outlining the essential compliance requirements. 

What is a Casual Employee?

Under Section 15A of the Fair Work Act, a person is considered a casual employee if, when they start the job, the employment relationship does not have a firm advance commitment to ongoing indefinite work. In that case, the employee is entitled to a 25% casual loading. 

In our experience, the biggest trap for hospitality operators is relying entirely on their written contract. Previously, the Court prioritised the characteristics of the relationship (Workpac Pty Ltd v Rossato (2020) 278 FCR 179), but the High Court of Australia in WorkPac Pty Ltd v Rossato [2021] HCA 23 overturned that decision, prioritising the expressed written terms of the contract. Finally, the Federal government were not satisfied with the High Court decision and passed legislation to focus primarily on the relationship of the parties, and not the expressed terms of the contract. Nowadays, the Fair Work Commission and the courts both examine the practical reality of the working relationship. While having a regular roster alone does not make an employee permanent, an unchanging pattern of hours over a long period of time with no end in sight is a strong indicator that the employee’s status has changed from casual to permanent. 

How do you know if your employee is genuinely casual?

1. The employee is free to accept or reject shifts.
2. Work is offered on a need-based, irregular or changing basis. 
3. Future work depends on business demands.
4. The employee receives 25% hourly loading instead of accruing paid leave and redundancy benefits. 

What is a Permanent Employee?

Full or part-time permanent employees work on an ongoing basis. They perform ongoing consistent roles within the business, like chefs, supervisors, and managers. 

How do you know if your employee is permanent?

1. They work set or predictable hours.
2. They have a regular pattern of work. 
3. There is a mutual expectation that work is continuous.
4. The employee has been employed for more than 12 months working on a regular and systematic basis.
5. They accrue annual and sick leave under the National Employment Standards. 
6. They are legally entitled to a formal notice of termination (or pay in place of notice) and, if necessary, redundancy pay. 
7. They are entitled to paid public holidays, or higher rates if they work during public holidays. 

The new “employee choice” pathway

The Employee Choice Pathway replaced the requirement for employers to offer casual conversion. This new path means that employees can request the transition if they believe their role has changed into permanent employment. This has to be made with a written notification. For employees to qualify, they must believe that they are working regular systematic hours that no longer fit the definition of a casual employee. There is also a minimum employment requirement: 6 months for businesses with more than 15 employees and 12 months for businesses with less than 15 employees. 

Casual Employment Information Statement (CEIS)

Employers must distribute the Fair Work CEIS to casuals at regular intervals:

1. At the start of their employment
2. After 6 months of employment (not required for small businesses)
3. After 12 months of employment, and at every anniversary after. 

The Risk of Employee Misclassification

Employee misclassification is when an employee is treated as a casual even though the reality of the work reflects permanent employment. If you misclassify an employee, you could expose your business to these consequences: 

1. Back-payment claims for unpaid annual leave, personal leave, and redundancy entitlements (possibly even when casual loading was paid). 
2. The Fair Work Ombudsman can issue legal proceedings for non-compliant businesses, which could lead to substantial civil penalties. 
3. Intentional systematic underpayment, or intentional conduct to avoid casual conversion obligations, is illegal. It is considered wage theft and could lead to criminal prosecution. 

Practical Steps for Hospitality Employers

1. Audit your roster regularly. If a casual is working identical, predictable shifts consistently, re-assess their employment status. 
2. Ensure your payroll clearly identifies base and casual loading rates. 
3. Automate CEIS delivery at the required times. 

Navigating the complexities of the Hospitality Award and the Fair Work Act can be difficult. If you need professional legal advice, feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article, and if you require specific legal advice, please contact us.