Last Updated on 19/09/2025 by Damin Murdock
Casual conversion has become one of the most common sources of disputes in hospitality workplaces. Employers who fail to handle it properly risk facing claims of underpayment, adverse action, or unfair dismissal at the initiative of the employer, also called constructive dismissal. This article provides a detailed roadmap for hospitality employers to follow when converting casual employees to permanent employment.
Step-by-Step
Step 1: Know Who is Eligible
Under Division 4A of the Fair Work Act 2009 (Cth) (the Act) and the Hospitality Industry (General) Award 2020, a casual employee is eligible to convert into a permanent employee if they have been employed by a small business employer (fewer than 15 employees) for at least 12 months, or 6 months if not employed by a small business employer, and they have worked a regular pattern of hours. This test focuses on whether the job has become effectively ongoing. For example, if a barista works the same 30 hours each week for 6 months, they would likely be eligible for conversion.
Step 2: Employer’s Obligation to Offer Conversion
Employers should proactively offer conversion to casual employees after their 12-month anniversary where the employee has had a regular pattern of work. This requirement prevents employers from avoiding conversion simply by ignoring it. The offer must be made in writing, setting out the option to convert to full-time (if hours are 38 per week) or the option to convert to part-time (if regular hours are less than 38 per week).
Step 3: Employee’s Right to Request Conversion
Even if the employer does not offer conversion, an employee can request it at any time after 12 months, provided they meet the eligibility test. Employers can only refuse on reasonable business grounds, such as when the employee’s role will cease in the near future, hours of work will significantly reduce, or the regular pattern of hours is expected to change. Any refusal must be in writing, be provided within 21 days of the request, and clearly outline the reasons.
Step 4: Formalising the Conversion
If conversion proceeds, employers should draft a new contract clearly setting out the permanent terms, remove the casual loading, update payroll systems to reflect accrual of leave and payment of termination entitlements, and communicate clearly with the employee about how their pay and benefits change.
Step 5: Consultation and Record-Keeping
Under the Hospitality Award, consultation is critical. Employers should meet with the employee to discuss the conversion, provide clear written documentation of the outcome, and keep records for at least 7 years as required under the Fair Work Regulations.
Step 6: Risks of Non-Compliance
If an employer fails to meet their obligations, employees may apply to the Fair Work Commission to challenge the refusal, employers may be subject to penalties for breaching the Hospitality Award, and back-pay claims for entitlements may arise if an employee argues they were effectively permanent all along.
Practical Tips for Hospitality Employers
- Create a calendar reminder to review casual employees approaching 12 months.
- Develop a standard template for conversion offers and refusals.
- Train managers on the importance of compliance.
- Seek legal advice where conversion is refused on operational grounds.
Key Take Aways
Casual conversion is not optional. It is a mandatory obligation under the Act and the Hospitality Award. Employers who take a proactive, transparent approach can avoid disputes, maintain compliance, and build stronger relationships with their workforce.
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."
