Permanent, Casual or Contract: How Australian Employment Types Differ

Permanent Employment: Full-Time or Part-Time

A permanent employee (full-time or part-time) has an ongoing employment relationship with a firm advance commitment to continuing work, and accrues the National Employment Standards entitlements: 4 weeks' paid annual leave, 10 days' paid personal/carer's leave, notice of termination on the scale set out in s117 of the Fair Work Act, and — once the minimum employment period under s383 is cleared (6 months, or 12 for a small business with under 15 staff) — protection from unfair dismissal. Part-time simply means fewer than full-time hours on a regular, agreed pattern; the entitlements accrue proportionally to hours worked, not lost.

Casual Employment: The Legal Definition

Section 15A of the Fair Work Act now defines a casual employee by the absence of a firm advance commitment to continuing and indefinite work — assessed on the real substance and practical reality of the relationship, not just what the contract says. Indicia the Act specifically points to include whether the employer can genuinely choose not to offer work (or the employee can genuinely choose not to accept it), whether there's a reasonably likely ongoing need for the work, whether full-time or part-time employees do the same kind of work, and whether there's a regular pattern of work — though the Act is explicit that a regular pattern by itself doesn't turn a casual role into something else.

In exchange for not accruing paid leave, casuals are paid a loading — commonly 25%, depending on the applicable award or agreement — specifically as compensation for the annual leave, personal leave, notice and redundancy pay they miss out on.

The 2024 Change: Casual Employee Choice Pathway

The Fair Work Act's 'Closing Loopholes' amendments overhauled how a casual employee can move to permanent employment. Under the current Division 4A of the Act, a casual employee can give their employer a written notification under section 66AAB if they genuinely believe they no longer meet the casual criteria in s15A — but only once they've been employed for at least 6 months (or 12 months if the employer is a small business), and only if they haven't had a notification rejected or a related dispute resolved in the previous 6 months.

The employer must respond in writing within 21 days (s66AAC), either accepting the notification (specifying the new hours and start date) or rejecting it on one of three limited grounds: the employee genuinely still meets the casual definition, there are 'fair and reasonable operational grounds' (the Act gives examples: substantial changes to how work is organised, significant impact on the enterprise, or changes needed to avoid breaching a fair work instrument), or accepting it would breach a required recruitment or selection process. If accepted, the change to full-time or part-time employment takes effect from the start of the employee's next full pay period (s66AAD).

Independent Contracting and the ABN

An independent contractor runs their own business and is typically paid via an invoice against an Australian Business Number (ABN) rather than through payroll — see our guide to the difference between a TFN and an ABN. Contractors don't get the National Employment Standards, aren't covered by unfair dismissal protections in the same way, and handle their own tax (generally quarterly, via activity statements) and superannuation, though genuine contractors engaged mainly for their labour can still trigger superannuation obligations for the business engaging them in some circumstances.

Whether someone genuinely is a contractor, rather than an employee labelled as one, is now determined under s15AA of the Fair Work Act by the 'real substance, practical reality and true nature' of the whole relationship — considering not just the contract's wording but how it's actually performed. This section was specifically enacted in response to two 2022 High Court decisions (CFMMEU v Personnel Contracting and ZG Operations Australia v Jamsek), which had held that a written contract's own terms should generally decide the question; s15AA restores a broader, whole-of-relationship test.

Sham Contracting

It's specifically unlawful for an employer to represent to someone that a genuine employment relationship is actually a contract for services under which they work as an independent contractor (s357 of the Fair Work Act), unless the employer can show it reasonably believed the arrangement genuinely was a contract for services. It's also unlawful for an employer to dismiss (or threaten to dismiss) an employee specifically to re-engage them to do the same work as a contractor (s358). Being asked to obtain an ABN and invoice for work that in every practical respect looks like an ongoing job — set hours, direction and control by the business, no ability to send someone else to do the work, tools and workplace provided by the business — is a sign worth raising, since it can mean you're missing out on leave, notice and other entitlements you're legally owed.

The Visa Angle: Which Engagement Type a Sponsored Visa Actually Needs

The Skills in Demand (482) visa's nomination is built around an ongoing employment relationship between the sponsored worker and the sponsoring employer — a genuine position that needs to be filled on a continuing basis, which is a poor fit for casual or short-term contract arrangements, and independent contracting doesn't establish the employer-employee relationship a 482 nomination requires at all. This is a structural feature of the sponsorship framework, not a preference — it's part of why a genuinely casual or contracting arrangement generally can't be the basis for a 482 sponsorship, regardless of how many hours are actually worked.

Other visas don't carry that same requirement: a bridging visa, a graduate (485) visa, or a partner visa with full work rights allows casual, contract or permanent work equally, since none of them are tied to a specific sponsoring employer's ongoing need.

Next Steps

Know which category you're actually in — not just what your contract calls it — since it determines your leave, notice and job-security entitlements. If you're a casual approaching 6 or 12 months with an employer and believe the relationship has become an ongoing one in substance, the employee choice pathway is worth understanding in detail directly from the Fair Work Ombudsman's own materials or a workplace lawyer. If your work depends on employer sponsorship, confirm the engagement type your employer is actually offering matches what the visa nomination requires, ideally with your migration agent before an offer is finalised.

What actually makes someone a casual employee under Australian law?

Section 15A of the Fair Work Act defines it by the absence of a firm advance commitment to continuing and indefinite work, judged on the real substance and practical reality of the relationship rather than just the contract's label. A regular work pattern alone doesn't automatically make someone a permanent employee.

Can a casual employee become permanent in Australia?

Yes — since the 2024 Fair Work Act changes, a casual can notify their employer they believe they no longer meet the casual definition, once they've worked there at least 6 months (12 months at a small business). The employer must respond in writing within 21 days and can only refuse on specific, limited grounds.

What is sham contracting?

It's when an employer represents a genuine employment relationship as independent contracting, which is unlawful under s357 of the Fair Work Act unless the employer reasonably believed the arrangement genuinely was contracting. Signs include fixed hours, direct control by the business, and no ability to delegate the work — while being paid via an ABN invoice rather than payroll.

Do independent contractors get annual leave and sick leave in Australia?

No — the National Employment Standards apply to employees, not genuine independent contractors. Contractors handle their own leave, tax and generally their own superannuation, in exchange for more control over how and when the work is done.

Can I be sponsored for a 482 visa as a contractor or casual employee?

Generally not straightforwardly — the 482 nomination is built around an ongoing employer-employee relationship for a genuine, continuing position, which independent contracting doesn't establish and casual arrangements don't easily satisfy. Check the specific arrangement with your migration agent before assuming it will support a nomination.

How is it decided whether I'm really an employee or a contractor?

Under s15AA of the Fair Work Act, it's the real substance, practical reality and true nature of the whole relationship — not just what the contract says — including how the arrangement is actually performed day to day. This was introduced in 2024 specifically to override an earlier approach that focused mainly on the contract's own wording.

What percentage is casual loading in Australia?

Commonly 25%, though the exact figure depends on the award or enterprise agreement covering the role. It's paid as compensation for the paid leave, notice and other entitlements a casual employee doesn't receive.