Casual Conversion Rules in Hospitality

Last Updated on 31/07/2026 by Damin Murdock

Casual conversion is one of the most common sources of disputes in hospitality workplaces. Employers who do not handle the process properly expose themselves to the risk of costly claims of underpayment, adverse action or unfair dismissal. 

The Fair Work Legislation Amendment (Closing Loopholes) Act changes the rules around casual conversion from an employer-driven system to the Employee Choice Pathway. These changes have already taken effect since February 2026, and will apply to small businesses in August 2026.  

In this article, we provide a detailed compliance roadmap to help hospitality employers navigate casual conversion under the Fair Work Act and the Hospitality Industry (General) Award 2020. 

Small vs. Large Hospitality Businesses

Feature	Small Business Employer (< 15 Employees)	Medium to Large Employer (15+ Employees)
Minimum Employment Period	12 months	6 months
Who Initiates the Process?	The Employee (via written notification)	The Employee (via written notification)
Employer Response Deadline	Within 21 days in writing	Within 21 days in writing
Regular Pattern of Hours Required?	No longer strictly required; focus is on the true nature of employment	No longer strictly required; focus is on the true nature of employment

 

Step-by-Step Guide to Casual Conversion in Hospitality

• Determine Employee Eligibility

Under Division 4A of the Fair Work Act 2009, a casual worker can initiate a transition to permanent employment if they meet the statutory timeline (12 months for small businesses and 6 months for large operations).

While the assessment used to rely on a regular pattern of hours, the Closing Loopholes amendment now looks at the employment relationship. If there’s a mutual understanding between the employer and employee that the work is permanent and ongoing (for example, a waiter working identical rostered shifts without a clear end date), the employee may be eligible. 

• The Employee Choice Notification

The employer is no longer required to offer conversion at the 12-month mark proactively. Instead, the employee is responsible for providing written notification that they no longermeet the definition of a casual employee and wish to convert to a full-time or part-time status. This is called the “Employee Choice Pathway”, which has replaced the previous rules for changing to permanent employment. 

However, an employee cannot submit the notice if they are engaged in a dispute with their employer regarding their status, if they resolved a dispute about employee choice under a relevant dispute resolution process, or if they submitted a notice that was rejected in the previous 6 months.

• Assess and Respond

Once an employee has submitted their written request, the employer must consult with them and provide a formal written response within 21 days. Casual conversion requests can only be refused on fair and reasonable operational grounds, including:

• The role is ceasing to exist in the near future.
• The working hours are expected to decrease significantly. 
• Acceptance would mean a substantial change to the business’s roster structure. 

It is important to note that any refusal has to be very detailed. Simply stating operational grounds is not legally sufficient and can trigger a Fair Work dispute. 

• Formalising the Transition

If the conversion is approved, employers must sign a permanent employment contract with their employee. The contract must remove the 25% casual loading, have a permanent salary or hourly rate that’s compliant with the Hospitality Industry Award, and update your payroll systems to begin accruing annual leave, personal leave, and termination notice entitlements. 

• Statutory Consultation and Record-Keeping

The Hospitality Award strictly demands a fair consultation process. Employers must meet with the employee to discuss any changes to their hours, pay structures, or duties. Moreover, under the Fair Work Regulations, all records pertaining to the conversion request, consultation, and outcome must be kept on record for at least 7 years.

Risks of Non-Compliance for Hospitality Employers

Ignoring a conversion request, or denying it for unsubstantiated reasons, carries steep legal and financial consequences, such as:

• Employees could file back-pay claims, and could be entitled to years of unpaid annual or sick leave. 
• Employees have the right to escalate unresolved conversion disputes directly to the Fair Work Commission. 
• Intentionally misclassifying workers to avoid permanent entitlements can result in large statutory fines. 

Practical Compliance Tips

From our experience, these are a few steps hospitality businesses can take to protect themselves: 

1. Even though employers no longer have to offer conversion, conducting roster audits remains an important step. Employers need to make sure they don’t have casual employees working identical, predictable rosters for 9 months or more, with no expectation of an end, which still opens the door to a misclassification dispute. 
2. Employers should keep updated, compliant templates ready for both accepting and refusing conversion requests to meet the 21-day deadline. 
3. Train venue managers, head chiefs, and shift supervisors on what they can and can’t say regarding permanent employment promises.

Frequently Asked Questions 

Can a casual employee refuse permanent employment?

Yes, the Employee Choice Pathway is entirely optional. If a casual employee prefers their casual status, they do not have to request a conversion.

Do I still need to hand out the Casual Employment Information Statement?

Yes, employers must still provide the Casual Employment Information Statement (CEIS) to all new casual employees before or very soon after their employment, and again at their first anniversary for small businesses and at 6 months for non-small businesses. 

What happens if we can’t agree on the new permanent hours?

If you accept the conversion but cannot agree on the permanent roster or hours, the dispute resolution procedures under the Hospitality Award will apply. You must attempt to resolve it internally before escalating it to the Fair Work Commission.

Need Assistance with Employment Law Compliance?

Navigating the complexities of the Fair Work Act and modern awards requires precision. For tailored legal counsel, 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.