Casual Conversion: What Victorian Manufacturers Must Offer in 2026

Who this applies to

Every Victorian manufacturer that engages casual staff — shift fill-ins on the line, seasonal pack-down labour, casual forklift drivers — is covered by the Fair Work Act 2009 (Cth). This is Commonwealth legislation, not a Victorian law, and it sits alongside (not instead of) your OHS obligations under the Victorian OHS Act. The relevant rules are the casual employment provisions in Part 2-2, Division 4A, built on the statutory definition of a "casual employee" in s.15A.

The current mechanism: the employee choice pathway

The old system — where the employer had to proactively offer conversion after 12 months — was overhauled by the Closing Loopholes reforms, effective 26 August 2024. A transition period followed: the old employer-offer and employee-request pathways kept operating for casuals already on the books, ending on 26 February 2025 for most employers and 26 August 2025 for small business employers (fewer than 15 employees, counting associated entities, per the Fair Work Ombudsman's glossary). Checked against fairwork.gov.au at the time of writing, both transition windows have now closed. The mechanism operating today, for every employer regardless of size, is the employee choice pathway.

Under s.15A, a worker is only a casual if, at the time employment starts, there's no firm advance commitment to continuing and indefinite work, and they're paid a casual loading or a specific casual pay rate. Whether that "firm advance commitment" exists is judged on the real substance and practical reality of the relationship — not just the contract wording. Fair Work looks at whether you actually offer or withhold work in practice, whether the employee can and does turn work down, whether similar work is likely to continue, whether permanent staff do the same job, and whether a regular pattern of hours has developed. No single factor decides it, and a regular roster alone doesn't automatically make someone a converted employee — but it's exactly the kind of fact pattern that lets a casual argue they no longer fit the definition.

When a casual gets the right to ask

A casual employee can give you written notice under the employee choice pathway once they've been employed for:

• 6 months, for most employers; or
• 12 months, if you're a small business employer (fewer than 15 employees).

To give notice, the employee must believe they no longer meet the casual employee definition — in practice, that they're now working a settled, ongoing pattern with a real expectation of continuing work. They can't give notice while an earlier employee choice dispute about them is still unresolved, or if, in the previous 6 months, you already refused a notice from them or a dispute about one was resolved. Casuals who are happy to stay casual don't have to do anything — conversion is the employee's choice to trigger, not an automatic status change.

What you must do when a notice lands

Getting this process right has two steps, not one.

First, consult. Before you respond, you're required to discuss the change with the employee: whether they'd move to full-time or part-time, what their ongoing hours would be, and when the change would start. Skipping straight to a written refusal without that conversation is itself non-compliant.

Second, respond in writing within 21 days. You must tell the employee, in writing, whether you accept the notice. If you accept, your letter needs to state the new employment status, the new hours of work, and the start date. The change takes effect from the first day of the employee's first full pay period after you respond, unless you both agree on a different date.

If you don't accept, your written response must set out your reasons. You can only refuse on one of three grounds:

1. The employee still meets the casual employee definition — there genuinely is no firm advance commitment to ongoing work.
2. Fair and reasonable operational grounds — for example, the change would require substantial changes to how work is organised in your plant, would have a significant impact on your operations, or would mean substantial changes to employment conditions needed to avoid breaching an award or agreement (most manufacturing casuals sit under an award such as the Manufacturing and Associated Industries and Occupations Award).
3. Accepting would mean you couldn't comply with a legally required recruitment or selection process — relevant mainly to government-linked or labour-hire-adjacent arrangements.

A vague "we'd rather keep them casual" is not a valid reason, and the three grounds above are exhaustive — Fair Work doesn't leave a general discretion.

Anti-avoidance and dispute rights

You cannot reduce or vary a casual's hours, change their pattern of work, or end their engagement in order to avoid these obligations or to stop them exercising this right — that's treated as adverse action against a protected workplace right, and it's a separate exposure from getting the conversion decision itself wrong. If a dispute arises over a notice, a refusal, or the terms of acceptance, either party can take it to the Fair Work Commission, which will first try conciliation or mediation and, failing that, can arbitrate a binding outcome.

Getting it wrong: what it actually costs

Fair Work Ombudsman litigation can result in court-ordered penalties of up to $10,800 per contravention for an individual and $54,000 per contravention for a body corporate — and each casual you mishandle, or each defective notice response, can be treated as a separate contravention, not one single penalty for the business. On top of that sits the FWC dispute and arbitration pathway, and any adverse-action claim if hours were cut or a casual was let go around the time they raised a conversion notice. For a plant running a dozen or more casuals through peak season, a single sloppy refusal letter with no genuine operational grounds, or a quiet reduction in someone's shifts right after they gave notice, is the kind of fact pattern that turns into exactly that litigation.

What compliance looks like in practice

• Track eligibility dates. Know which casuals have crossed 6 (or 12) months, the same way you'd track training records for inductions — a notice can land at any time once the threshold passes, and a slow or missed 21-day response is itself the breach.
• Consult before you decide. Document the conversation about hours, status and timing — not just the outcome.
• Write real reasons, not boilerplate. If you're refusing on operational grounds, be specific about what would actually change in how the line runs.
• Keep paperwork workforce-wide. If you also run labour hire to cover casual gaps, make sure your host employer checklist and your casual conversion register don't contradict each other — a labour hire worker converting elsewhere, or a casual you're about to convert, both need clean records.
• Don't let this sit only with payroll. Whoever runs young worker inductions or onboarding is often the first to notice a casual settling into a genuinely regular pattern — build a prompt into that process to flag approaching eligibility dates to whoever owns Fair Work compliance.

If you're not confident your current casual cohort would survive scrutiny against the s.15A definition, that's worth checking now, before a notice arrives rather than after.

This article is general information for Victorian manufacturers, not legal advice. Last updated: 18 October 2026.