Last Updated on 22/09/2025 by Damin Murdock
The hospitality industry is one of Australia’s largest employers, and it is built on a workforce that thrives on flexibility. Cafes, restaurants, bars, and hotels often rely heavily on casual staff to fill shifts around fluctuating customer demand. But while casual employment offers convenience, it also carries significant legal obligations for employers. Misunderstanding the distinction between casual and permanent employment can expose hospitality operators to claims of underpayment, disputes before the Fair Work Commission, and reputational damage.
This article takes a deep dive into the differences between casual and permanent employment in the hospitality sector, outlines recent legal developments, and provides practical compliance tips for business owners.
What is a Casual Employee?
The definition of a casual employee was clarified by amendments to the Fair Work Act 2009 (Cth) (the Act). Under section 15A, a person is a casual employee if they are offered a job with no firm advance commitment to continuing and indefinite work according to an agreed pattern of hours, and they accept the offer on that basis.
Key indicators include no guaranteed hours of work, irregular work patterns, employment offered on an as-needed basis, no expectation of ongoing employment, and a 25% casual loading in place of leave and redundancy entitlements.
Casuals receive higher hourly pay, but they do not accrue annual leave, paid sick leave, or redundancy benefits. In hospitality, casuals are used extensively to cover weekends, evenings, and seasonal peaks.
What is a Permanent Employee?
Permanent employees (full-time or part-time) are engaged on an ongoing basis. They work predictable hours each week, have a reasonable expectation of continuing employment, and receive entitlements such as paid annual leave, paid personal/carer’s leave, paid public holidays, notice of termination and redundancy pay (where applicable), and protection from unfair dismissal after the minimum qualifying period.
Permanent employees are generally more costly in terms of entitlements but provide stability and consistency, which can be valuable for retaining skilled hospitality workers like chefs, supervisors, and managers.
Casual Conversion
Casual employees also have the right to request conversion themselves, even if not offered by the employer. Employers must provide every casual employee with the Casual Employment Information Statement (CEIS) at the start of employment. This document explains their rights and how to request conversion.
Key Court Cases Shaping the Law
The High Court’s decision in WorkPac Pty Ltd v Rossato [2021] HCA 23 was pivotal. In this case, the Court ruled that employment status depends on the written contract at the time of engagement, not merely on the actual work pattern that develops. This decision gave employers more certainty, provided they use well-drafted casual contracts that make clear there is no guarantee of continuing work. However, the case also highlighted risks for employers who use casuals on regular hours over long periods. Even if an employee is classified as casual, the law requires that they be given the option of conversion once they meet eligibility criteria.
Risks of Misclassification
If a permanent employee is wrongly engaged as a casual, the consequences can be significant. Employers may face back payment of entitlements (annual leave, sick leave, redundancy), penalties from the Fair Work Ombudsman (FWO), legal costs defending claims before the Fair Work Commission, and reputational damage from underpayment scandals.
Hospitality businesses have been under increasing scrutiny, with underpayment scandals making national headlines. Payroll compliance is now a reputational issue as much as a legal one.
Practical Steps for Hospitality Employers
- Audit contracts to ensure casual employees are correctly classified. Check patterns of work and assess conversion obligations if a casual is working the same shifts every week for more than 6 months.
- Communicate rights by providing the CEIS and explaining conversion options at the 12-month mark.
- Document decisions by keeping written records of conversion offers, refusals, and reasons.
- Train managers so rostering staff and supervisors understand when casuals must be offered permanency.
Key Take Aways
The difference between casual and permanent employment in hospitality is more than just labels, it carries real legal and financial consequences. Employers should proactively manage classification, monitor work patterns, and follow the Award and the Act requirements to stay compliant.
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.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
