Casual vs Permanent Employment in Construction

What it is

Two questions get tangled on residential sites. The first is whether a worker is casual or permanent. The second is whether they should be on daily hire, a construction-specific engagement type that is neither. Builders get the second wrong more often, and it is the costlier mistake. Since August 2024 casual employment has had a statutory definition that looks past the paperwork. Writing casual in the contract no longer settles it.

The definition and what 2024 changed

Section 15A of the Fair Work Act 2009 says a person is casual only if two things are true:

• the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work, and
• the employee is entitled to a casual loading or a specific casual rate of pay.

The Closing Loopholes changes that started on 26 August 2024 rebuilt the first limb. It is now assessed on the real substance, practical reality and true nature of the employment relationship, and a firm advance commitment can sit in the contract or in a mutual understanding that never became a contract term.

The note to s15A(2)(c) cuts both ways. A regular pattern of work does not by itself create a firm advance commitment. A chippy who works most weeks can still be a genuine casual if the work is really offered and really refusable. What breaks the classification is the commitment, not the pattern.

Daily hire is not casual

Clause 8.1 of MA000020 lists four engagement types: daily hire, full-time weekly hire, part-time weekly hire and casual. Daily hire is its own category. It is permanent employment with a one day notice period.

Under clause 9.1 either side gives one day of notice, or one day of pay is paid or forfeited. That works because s123(3)(b) of the Fair Work Act switches off the NES notice provisions for daily hire employees in building and construction. A daily hire employee still accrues annual leave and personal leave, still sits inside the award redundancy scheme and is paid a follow-the-job loading inside the hourly rate to compensate for time between jobs.

The builder who wants flexibility usually wants daily hire, not casual.

The employee choice pathway

Clause 13 points to the NES, and the mechanics live in ss66A to 66MA. An eligible casual may give written notice that they believe they no longer meet the s15A definition once employed for at least 6 months, or 12 months if you are a small business employer. They cannot give notice while a dispute about it is running, or if in the previous 6 months you refused a notice or a dispute was resolved.

Your obligations are short and timed:

• Consult the employee before responding. If accepting, discuss whether they go full-time or part-time, their hours and the start date.
• Respond in writing within 21 days.
• If you refuse, give reasons, and they must be one of the three grounds in s66AAC(4): the employee still meets the casual definition, there are fair and reasonable operational grounds or accepting would stop you complying with a recruitment or selection process required by law.

Missing the 21 days is a contravention by itself. Cutting hours, changing the pattern of work or ending the engagement to sidestep the pathway is adverse action.

The loading and the offset

Clause 12.4 sets the award casual loading at 25 per cent on ordinary hours and says what it buys: annual leave, personal/carer's leave, community service leave, notice of termination and redundancy benefits plus public holidays not worked. Clause 12.3 adds a minimum 4 hours per engagement, so a casual sent home after an hour still costs four.

If a misclassified casual later claims those entitlements, s545A lets a court set the loading you paid against the claim. That is not a full answer. Subsection (2) says the court must reduce the claim by the loading amount, but subsection (3) lets it reduce by only a proportion, which may be nil, depending on whether the instrument or contract names the entitlements the loading compensates for and apportions it between them. Clause 12.4 names them but does not apportion them. Your contract can do better: spell out the split.

What getting it wrong costs

The bill is never just the loading: annual leave that never accrued, personal leave, public holidays, notice and award redundancy across the whole period, plus superannuation and civil penalties, reaching back six years.

The fix is cheap. Clause 12.2 requires a casual to be told in writing that they are casual, by whom they are employed, the job, the classification level and the rate. Then test the real substance every few months. If the crew turns up every day because everyone assumes they will, you have a daily hire employee wearing a casual label, and the label will not save you.