Small businesses – are you ready for casual conversion and the right to disconnect?

A right to disconnect and new casual conversion entitlements were introduced from 26 August 2024, but small businesses were given a 12-month reprieve before they were required to implement the new laws.

From 26 August 2025, small businesses will be subject to the new obligations. Which begs the question: are you ready?

What is changing for casual conversion?

The good news for small businesses is that the new ‘employee choice’ pathway of casual conversion is functionally similar to the ‘residual right to request’ that already existed.

Under the previous casual conversion requirements, small businesses were exempt from the requirement to offer casual conversion after the casual has 12 months of service. However, casual employees of small businesses could make a request to convert to permanent employment after 12 months of service.

The new employee choice system is also based on a casual employee’s right to notify their employer in writing that they want to convert. For small businesses, an employee must have 12 months of service before they can do this (rather than the 6 months of service for larger employers).

If an employer receives a notification, they must give a written response within 21 days that accepts or rejects the notification. Before providing a response, employers must consult with the employee.

Employees may also have other casual conversion rights under enterprise agreements and these will continue to apply.

What is the difference?

The main difference between the new and old systems is that the grounds on which an employer can refuse conversion have changed. Refusals can only be made on limited grounds, namely that:

1. the employee still meets the definition of a casual employee in the Fair Work Act, for example because there is no “firm advance commitment to continuing and indefinite work”; or
2. there are “fair and reasonable operational grounds” to refuse the request, taking into account the impacts on the business and the employee’s terms and conditions of employment.

An employee who has had their request refused can lodge a dispute with the Fair Work Commission, so it is recommended to seek advice from Australian Industry Group before refusing a request from an employee.  Members of Australian Industry Group can find detailed information on the new process in our Casual conversion to full-time or part-time employment under the NES article.

Tips for dealing with an employee choice notification

Taking time early to consider how the business will deal with employee choice request can avoid surprises later on and reduce the risk of making an avoidable mistake that can lead to unexpected consequences.

Employers are a recommended to prepare by:

Examining how many employees may be eligible to make a request

 Which casual employees have been regularly working for at least 12 months?

Taking a step back and consider how the employment relationship looks from the outside

For example, are they working in the same way as other permanent workers, or are they offered work on an irregular and as needs basis?

Getting in front of the issue by asking why using casual employees is necessary or beneficial to the business

If the business does have casual employees working regular hours, why? A critical look at why a permanent employee would not be appropriate in the role will be useful when considering whether there are fair and reasonable operational grounds to refuse a potential request.

Be aware of the timeframes for responding to a request

Employers have 21 days to provide a written response to a request. This means there is no need to respond to an employee’s request on the spot. However, do not take too long, as a failure to respond at all will be a breach of the National Employment Standards.

What is the right to disconnect?

The right to disconnect is a right for employees to refuse to read, monitor or respond to contact from their employer or a third party (such as a customer) outside of the employee’s working hours unless the refusal is unreasonable. Importantly, it is not a blanket ban on employers attempting to contact employees at all when they are not working.

Whether a refusal is unreasonable will depend on the circumstances and considers:

• the reason for the contact or attempted contact;
• how the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee;
• the extent to which the employee is compensated:
  • to remain available to perform work during the period in which the contact or attempted contact is made; or
  • for working additional hours outside of the employee’s ordinary hours of work;
• the nature of the employee’s role and the employee’s level of responsibility;
• the employee’s personal circumstances (including family or caring responsibilities).

Australian Industry Group Members can refer to our Right to Disconnect Summary which gives more detail on the right to disconnect and the considerations for reasonableness.

Members should also familiarise themselves with right to disconnect terms under applicable awards, which will similarly come into operation on 26 August 2025 for small business employers. Members can find further information in Member Advice NAT 033/24: Model Right to Disconnect Term has been inserted into Modern Awards.

Tips for preparing for the right to disconnect

Unfortunately, the right to disconnect is a new law that has no previous equivalent, and despite the right to disconnect being active over the past 12 months for larger employers, there have been no significant cases to give guidance on the limits of the right.

Given the uncertainty around the provisions, employers are recommended to:

Consider the reason for the out of hours conduct

Consider the working hours of roles (including ordinary and additional working hours). Think about what hours are required and situations when contact outside those hours is necessary. At the same time consider whether employees are remunerated for outside hours contact, and any of their particular circumstances that may need to be considered, including their family or carer responsibilities.

Check for relevant award or enterprise agreement terms

Check compliance with industrial instruments. All modern awards have a right to disconnect term that provides some additional detail on the right to disconnect for applicable employees. Enterprise agreements can also contain a term about the right to disconnect provided that it is more favourable to employee than the Fair Work Act 2009.

Give guidance to managers on when out of hours contact is appropriate and how to react

Educate managers on the content and effect of the right to disconnect under the Fair Work Act, and any applicable award or agreement. Also provide managers with information about the process in the Fair Work Commission to resolve disputes and potential general protections or unfair dismissal claims, for example, where an employee claims unlawful adverse action because of they use their right to disconnect).

Set reasonable expectations on out of hours contact

Having considered what the right to disconnect means for your workforce, make sure that processes and documentation supports this, including contracts of employment, remuneration and management approach .

Further information

For assistance with your workplace matters, Members of Australian Industry Group can contact us or call our Workplace Advice Line on 1300 55 66 77 for further information.