Full-Time To Casual Letter Template For Australian Employers

Changing an employee from full-time to casual might sound simple (“they want fewer hours, so we’ll just switch them to casual”), but in Australia, there are a few legal and practical steps you’ll want to get right.

The biggest risk for small businesses is treating the change like a quick admin update, when it’s actually a change to the employee’s employment relationship (including their hours, leave entitlements, and job security).

In this guide, we’ll walk you through what a full-time to casual conversion usually involves, the key issues to check before you agree, and a practical template letter you can adapt for your business (a full-time to casual letter template).

Important note: In most cases, a permanent employee can’t be “made casual” without their genuine agreement. You’ll also want to ensure the arrangement aligns with the Fair Work Act, any applicable modern award, and any enterprise agreement (if you have one).

When Does a Full-Time to Casual Change Make Sense?

There are plenty of legitimate reasons why a full-time to casual change can be the right move for your business and your team member.

Common scenarios we see include:

• Employee-initiated changes (e.g. study, caring responsibilities, health issues, or other commitments).
• Seasonal or fluctuating demand where consistent full-time hours are no longer available.
• Role restructure where the work becomes intermittent or project-based.
• Trialling a flexible arrangement before a longer-term restructure (but you’ll still need to document it properly).

It’s also worth asking: is casual employment actually the best fit, or would part-time be more appropriate?

If the employee will still work regular, predictable hours each week, moving them to part-time (rather than casual) can be cleaner and reduce the risk of a “casual but not really casual” situation.

Why You Should Document The Change (Even If Everyone Agrees)

Even when the employee requests the change and everyone is on good terms, the details matter. A written letter:

• confirms the employee’s agreement
• sets expectations around hours and rostering
• clarifies leave entitlements (or the lack of paid leave for casuals)
• helps reduce misunderstandings later (especially if business needs change)

In practice, it’s one of the simplest ways to prevent employment disputes before they start.

Key Legal Issues To Check Before You Switch Someone to Casual

Before you use a full-time to casual letter template, it’s worth doing a quick “legal sense check” on whether the proposed arrangement fits casual employment in Australia.

1) The Employee Must Genuinely Agree

Generally, you can’t unilaterally convert a permanent employee to casual. A move from full-time to casual usually requires a mutual agreement, because it changes fundamental terms of employment (including paid leave and ongoing hours).

If you’re proposing the change (rather than the employee requesting it), it’s especially important to tread carefully and get advice before you implement anything.

2) Check The Award/Enterprise Agreement Rules

A modern award or enterprise agreement might set rules about:

• minimum engagement periods
• casual loadings
• rostering and shift change requirements
• overtime and penalty rates
• casual conversion pathways (casual to permanent and sometimes vice versa processes)

If you’re unsure which award applies, it’s often worth getting help to avoid underpayment risk.

3) Casual Loading vs Permanent Entitlements

Casual employees typically receive a casual loading (often 25% under many awards) instead of paid entitlements like:

• paid annual leave
• paid personal/carer’s leave
• paid compassionate leave

However, casual employees can still have National Employment Standards (NES) entitlements to unpaid carer’s leave and unpaid compassionate leave in certain circumstances.

Your letter should clearly state what the employee’s new status is, what this means for entitlements, and how their pay rate will be calculated.

4) Notice of Termination/Resignation Can Change

When you move someone to casual, the rules around notice and termination can change depending on the award, contract terms, and circumstances.

If you’re planning to stop offering shifts (or reduce shifts significantly), be careful: poor handling of shift allocation can create complaints or claims, especially if the employee relies on regular work.

It’s also a good time to check you have the right Employment Contract in place for the new arrangement.

5) Avoid “Sham Casual” Arrangements

Casual employment isn’t just “permanent employment with fewer hours”. A casual arrangement usually involves work offered as needed, with no firm advance commitment to ongoing work.

If the employee continues working a regular pattern of hours and expects ongoing work, they may later argue they weren’t truly casual (which can create backpay and entitlements risk).

This doesn’t mean you can’t roster casuals regularly, but it does mean you should be thoughtful about how you describe the relationship and how you manage rosters.

How To Use a Full-Time to Casual Letter Template (Step-By-Step)

A template is a great starting point, but you’ll still want to tailor it to your workplace, your industry, and the employee’s situation.

Step 1: Confirm The Employee’s Request (Or Your Proposal)

If the employee requested the change, keep a written record (email is fine). If you’re proposing the change, document your reasons and be prepared to consult.

Step 2: Confirm the Start Date and Employment Status

Be very clear about:

• the date the casual arrangement begins
• that the employee’s status will change from full-time to casual
• what happens to the old arrangement (it ends by mutual agreement on the conversion date)

Step 3: Set Expectations Around Hours and Rostering

Casual employment doesn’t guarantee ongoing hours, so your letter should explain:

• how shifts will be offered
• how the employee can accept or decline shifts (subject to award terms and operational needs)
• any minimum notice you’ll aim to provide for roster changes (where possible)

This is also a good time to ensure your internal rostering approach aligns with your legal obligations around shift changes and cancellations.

Step 4: Confirm Pay Rate, Loading, and Classification

List:

• the employee’s classification level (if relevant)
• their base hourly rate
• the casual loading (if applicable)
• penalty rates and overtime reference (usually “as per the applicable award”)

Step 5: Address Leave and Other Entitlements

Explain what changes (e.g. no paid annual leave) and what remains (e.g. superannuation still applies).

If the employee has accrued annual leave (and any other applicable paid leave entitlements) as a full-time employee, you’ll need to decide how you’ll deal with that balance. Generally, accrued entitlements remain owed and payable, although the timing and method of handling them can vary depending on the circumstances (including any award/enterprise agreement terms and what you agree with the employee). This is an area where advice is helpful.

Step 6: Attach or Reference Supporting Documents

In many workplaces, the letter is supported by:

• a new casual employment contract
• workplace policies (e.g. rostering, conduct, confidentiality)

If you use workplace policies, make sure they’re consistent and up to date. A well-structured policy suite can support your expectations around behaviour, performance, and operational processes.

Full-Time to Casual Letter Template (Australia)

Below is a practical full-time to casual letter template you can adapt. This is written from an employer perspective for Australian small businesses.

Tip: You should customise this for your award coverage, pay rates, and the specific arrangement you’re agreeing to.

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Private & Confidential

Dear ,

Re: Change of Employment From Full-Time to Casual

We refer to our discussions regarding your employment with and your request/agreement to change your employment status from full-time to casual employment.

This letter confirms the terms of our agreement as set out below.

1. Effective Date

Your employment status will change from full-time to casual employment effective from (the Conversion Date).

By mutual agreement, your full-time employment arrangements will end on the day immediately prior to the Conversion Date, and your casual employment will commence on the Conversion Date.

2. Position and Duties

Your position will be . Your duties will remain generally consistent with your current role, as directed by us from time to time, having regard to your skills and experience.

3. Casual Employment and Hours of Work

As a casual employee:

• there is no firm advance commitment by us to ongoing or regular work; and
• your working hours will be offered as shifts from time to time based on business needs.

You will be offered shifts in accordance with operational requirements and any applicable industrial instrument. You may accept or decline offered shifts, subject to any requirements under the applicable award/industrial instrument and your availability.

4. Pay

You will be paid an hourly rate of $ per hour (gross), which includes any applicable casual loading and is paid in accordance with applicable workplace laws.

Penalty rates, overtime rates and allowances (if applicable) will be paid in accordance with the applicable award/industrial instrument and workplace laws.

5. Leave and Entitlements

As a casual employee, you will not be entitled to paid annual leave or paid personal/carer’s leave. However, you may still be entitled to unpaid carer’s leave and unpaid compassionate leave under the National Employment Standards (NES) (where applicable). Superannuation contributions will be made in accordance with superannuation law.

Any accrued entitlements owing from your period of full-time employment (if applicable) will be dealt with in accordance with workplace laws and our payroll processes.

6. Policies and Conduct

You must comply with all lawful and reasonable directions and all workplace policies as amended from time to time, including policies relating to conduct, confidentiality, workplace health and safety, and the use of business systems and property.

7. Applicable Industrial Instrument

Your employment is subject to the and the National Employment Standards.

8. Fair Work Information Statements

We will provide you with the Fair Work Information Statement and the Casual Employment Information Statement, as required under the Fair Work Act 2009 (Cth).

9. Confirmation of Agreement

Please sign and return the acknowledgement below to confirm your agreement to the change to casual employment on the terms set out in this letter.

If you have any questions, please contact on .

Yours sincerely,

Acknowledgement

I, , confirm that I have read and understood this letter and agree to the change of my employment from full-time to casual employment on the terms set out above.

Signed: ____________________________

Name:

Date: ____________________________

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What Other Documents Should You Update When Converting Full-Time to Casual?

Your letter is a key piece of the puzzle, but it usually shouldn’t be the only document you rely on.

When you move a team member from full-time to casual, it’s a good chance to check that your paperwork matches what’s happening in the business day-to-day.

Depending on your situation, you might also need:

• Casual Employment Contract: This sets out the terms for casual engagement, pay, and key protections for your business. If you’re updating the employment relationship, having a proper Employment Contract (Casual) is often the cleanest approach.
• Workplace Policy Suite: If you have policies on conduct, rosters, and workplace expectations, make sure they’re consistent with casual engagement rules and your operational approach.
• Contract Variation Documents: In some cases, you may want a more formal variation approach (particularly if you’re changing multiple terms at once). For more complex updates, a Deed of Variation can be useful.
• Updated Rostering Process: Casual employees are often rostered differently. If you’re refining how you handle shift changes, it helps to align with best practice on notice and communication. (If your business frequently adjusts rosters, this is worth reviewing carefully.)

If you’re also changing an employee’s duties or overall role structure, it may be worth checking whether the change could be treated as a broader contract change that needs consultation and careful drafting.

A Quick Note on Recording Conversations

Some business owners like to “record the call” when discussing changes like this, so there’s a clear record of what was agreed.

Be careful: recording laws vary by state and territory. If you’re considering that approach, make sure it’s lawful and appropriate in your circumstances (for example, recording laws in Australia can be complex depending on where you and the employee are located).

In most cases, a clear written letter signed by both parties is the simplest and least risky way to document the agreement.

Key Takeaways

• Moving a worker from full-time to casual is a significant change to the employment relationship, and it should be documented carefully in writing.
• In most cases, you’ll need the employee’s genuine agreement to convert from permanent employment to casual employment.
• Before using a full-time to casual letter template, check the applicable modern award or enterprise agreement rules on classification, pay, rostering, and casual entitlements.
• Your letter should clearly confirm the conversion date, casual status, how shifts will be offered, pay rate (including casual loading), and the impact on leave entitlements (including that casuals may still be eligible for unpaid carer’s/compassionate leave under the NES).
• It’s often best to support the letter with an updated casual employment contract and consistent workplace policies to reduce disputes and compliance risk.

If you’d like help updating your employment documents or reviewing a full-time to casual conversion, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.