- How the unfair dismissal scheme works
- Gate three: award coverage or earnings below the high income threshold
- The 21-day deadline and the meaning of dismissal
- Underneath it all: who counts as a casual?
- The traps that turn a casual dismissal into a claim
- Where a lawyer earns their keep
- Read the roster before you make the call
Most small business owners assume a casual employee can be let go at will. The word "casual" suggests flexibility: work when it is offered, no ongoing commitment, no notice required. But under the Fair Work Act 2009 (Cth) (the Act), the label on the employment agreement is not what decides the question. A casual employee who has worked on a regular and systematic basis and reasonably expected that work to continue may be protected from unfair dismissal in the same way as a permanent employee. Terminate that person without a proper process and the Fair Work Commission (FWC) can order reinstatement or compensation.
This article explains how the unfair dismissal scheme operates for casual employees, in the order the FWC actually works through the issues. It covers the eligibility gates the employee must pass, the test that decides whether casual service counts toward the qualifying period, the traps that catch employers, and the points at which a lawyer is worth engaging.
How the unfair dismissal scheme works
Part 3-2 of the Act gives a dismissed employee the right to apply to the FWC for a remedy. Under s 385, a dismissal is unfair only if the FWC is satisfied that the person was dismissed, that the dismissal was harsh, unjust or unreasonable, that it was not consistent with the Small Business Fair Dismissal Code, and that it was not a case of genuine redundancy. The phrase "harsh, unjust or unreasonable" is the substantive test: the FWC weighs whether the employer had a valid reason, whether the employee was told of it and given a chance to respond, and whether dismissal was proportionate in all the circumstances.
The actors are few. The employee lodges an application with the FWC. The employer responds, and the matter usually goes first to conciliation, where a Commission member tries to settle the dispute without a hearing. If that fails, the FWC arbitrates. Under s 390 the remedies available are reinstatement or compensation, and compensation can be ordered only where reinstatement is inappropriate. Compensation is capped at the lesser of 26 weeks of the employee's remuneration or half the high income threshold, which for a dismissal in 2025-26 means a maximum of AUD 91,550.
Before any of that can happen, the employee must be "protected from unfair dismissal" under s 382. That requires two things: completion of the minimum employment period, and either coverage by a modern award, an enterprise agreement that applies to the employment, or annual earnings below the high income threshold. Each of these gates has its own rules for casual employees, and each is a potential battleground.
Gate one: is the employer a small business?
The first thing the FWC checks is the size of the employer, because it changes both the qualifying period and the standard of fairness. Under s 23, an employer is a small business employer if it employs fewer than 15 employees at the relevant time. This is a headcount of individuals, not full-time equivalents, and the counting rules are specific: the employee being dismissed counts, any other employees being dismissed at the same time count, and casual employees count only if they are regular casual employees, meaning they work on a regular and systematic basis. Occasional casuals are not counted. Employees of associated entities are counted as if they were employed by one business.
Getting the headcount wrong is expensive. A small business employer that is genuinely below 15 employees can rely on the Small Business Fair Dismissal Code, and its employees must serve a 12-month qualifying period before they can claim. A business with 15 or more employees has no code to fall back on and faces a six-month qualifying period.
The Small Business Fair Dismissal Code
Under s 388, a dismissal is consistent with the Small Business Fair Dismissal Code if the employer was a small business employer at the time and complied with the code. The code allows immediate dismissal without notice or warning only for serious misconduct such as theft, fraud, violence, sexual harassment or a serious breach of workplace health and safety obligations. For anything else, the employer must warn the employee that dismissal is possible, give a reason based on conduct or capacity, and give the employee a genuine chance to fix the problem. The FWC's guidance is that an employer defending a claim should be able to point to evidence such as written warnings, the code's own checklist, a statement of termination and signed witness statements.
Gate two: has the casual served the minimum employment period?
Under s 383, the minimum employment period is six months for a non-small business employer and one year for a small business employer, measured at the time notice of dismissal is given or immediately before the dismissal. The period is built from continuous service under s 384(1), and this is where casual employment has its own special rule.
When casual service counts: the s 384 test
Section 384(2) provides that a period of service as a casual employee does not count toward the minimum employment period unless two things are true: the employment was as a regular casual employee, and during that period the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis.
The two-limb test has its origins in the earlier federal unfair dismissal regime. In Hamzy v Tricon International Restaurants [2001] FCA 1589, the Full Federal Court considered the exclusion of casual employees engaged for a short period, which applied unless the employee was engaged on a regular and systematic basis and had a reasonable expectation of continuing employment. The same concepts now sit at the heart of s 384(2).
What do the limbs mean in practice? The FWC looks at the pattern of work actually performed, not the label in the contract. Regular and systematic means a recurring pattern of offers of work and acceptances: a casual who works the same shifts week after week on a published roster is engaged on a regular and systematic basis. Occasional or ad hoc work is not, and the FWC also considers whether offers were contingent on something else, such as another employee being sick or unavailable. The expectation limb is objective: the employee must have reasonable grounds to expect the work to continue, not merely a hope. In Bronze Hospitality Pty Ltd v Hansson (No 2) [2019] FCA 1680, the Federal Court confirmed that the expectation of continuing employment must be objectively reasonable, and examined the point in time at which that expectation must exist.
The practical consequence is that the casual label is not a shield. A casual who has worked a steady Friday and Saturday night roster for eight months at a non-small business employer will almost certainly have accumulated six months of countable service, whatever the contract says. The same applies inside the small business headcount: a regular and systematic casual counts toward the 15-employee ceiling, which can tip a business over the threshold and cost it the protection of the code.
Gate three: award coverage or earnings below the high income threshold
The second limb of s 382 requires the employee to be covered by a modern award, have an enterprise agreement that applies to them, or earn less than the high income threshold. The threshold is adjusted each 1 July. For the 2025-26 financial year it is AUD 183,100, and it rises to AUD 190,100 from 1 July 2026. An employee earning above the threshold is protected only if an award or enterprise agreement covers them. This gate rarely turns on casual status as such, but it matters when the casual is highly paid, for example in skilled trades or professional services.
The 21-day deadline and the meaning of dismissal
An application for an unfair dismissal remedy must be lodged within 21 days of the dismissal taking effect under s 394(2). The FWC can allow a further period only in exceptional circumstances, assessed against factors including the reason for the delay, any action the employee took to dispute the dismissal, and prejudice to the employer. Late applications from casual employees fail regularly, so the deadline is a practical filter in the employer's favour.
The other threshold issue is whether the casual employee was dismissed at all. For a casual, dismissal can be contentious: an employer may simply stop offering shifts rather than formally terminate. Whether that amounts to a dismissal at the employer's initiative depends on the circumstances, including the regularity of the prior pattern of work and the reasonable expectations it created. This is an area where the facts of each engagement matter, and where early legal advice can be decisive.
Underneath it all: who counts as a casual?
Before the s 384 test can apply, the employee must actually be a casual. Under s 15A, an employee is a casual only if 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 casual rate of pay. The assessment looks at the real substance and practical reality of the relationship, not the contract label. The statutory considerations include whether the employer can elect to offer or withhold work, whether the employee can accept or reject shifts, whether continuing work of that kind is reasonably likely to be available, whether permanent employees perform the same work, and whether there is a regular pattern of work. A regular pattern alone does not make an employee permanent, a point the Act makes express. The framework reflects the High Court's decision in WorkPac Pty Ltd v Rossato [2021] HCA 23.
Once someone is a casual, they remain a casual until a specified event changes their status, such as conversion to full-time or part-time employment under the casual conversion provisions in Division 4A of Part 2-2, or an order of the FWC. An employer cannot keep treating a de facto permanent employee as a casual simply by continuing to engage them on casual terms, and equally cannot re-label a long-term casual by declaration.
The traps that turn a casual dismissal into a claim
Three patterns produce most of the claims. The first is treating the label as decisive: engaging someone as a casual, rostering them identically to permanent staff for a year, then ending the engagement on the assumption that casuals have no rights. The second is the small business miscount: a business that counted only permanent staff to stay under 15 employees, when its regular casuals push it over the line, and it then misses the 12-month qualifying period and the code protection it thought it had. The third is the unrecorded roster: no records of offers, acceptances, rosters or expectations, which leaves the employer with no evidence to answer a claim built on the actual pattern of work.
There is also the reverse risk. An employer who genuinely needs flexibility and lets a casual go because work has dried up can still face a claim if the pattern of work over the prior months supports a reasonable expectation of continuing employment. The defence is process, not paperwork: a clear reason for the end of the engagement, communicated honestly, with records that show the work was genuinely irregular or that business circumstances had changed.
Where a lawyer earns their keep
The unfair dismissal jurisdiction is full of threshold disputes, and for casual employees those disputes turn on evidence the employer holds: rosters, timesheets, shift offers, emails and messages. A lawyer can help in three places. Before termination, a quick review of the employee's work pattern history can establish whether the person is protected and what the qualifying period is, which shapes whether the dismissal needs a proper process at all. During a claim, a lawyer can run the jurisdictional objections, gather the roster evidence, and negotiate a resolution at conciliation before the costs of a hearing mount. And for a small business, a lawyer can walk through the Small Business Fair Dismissal Code step by step, so that a dismissal that was always going to happen is documented in a way that survives scrutiny.
The expense of advice is usually small next to the alternatives: reinstatement of an employee the business no longer wants, or compensation of up to AUD 91,550, plus the management time and disruption of a defended claim. Most employment lawyers will assess the position in an initial consultation before any significant cost is incurred.
Read the roster before you make the call
The decisive document in most casual dismissals is not the employment agreement, it is the roster. The pattern of shifts actually offered, accepted and worked over the preceding months is what the FWC will weigh, and it is the evidence on which a reasonable expectation of continuing employment is built or destroyed. Before ending a casual engagement, pull the last six to twelve months of rostering history and ask whether a fair-minded observer would call that work regular and systematic. If the answer is yes, the casual label will not protect the business, and the dismissal needs a proper reason, a fair process and, where the size of the business allows, compliance with the Small Business Fair Dismissal Code. Getting that assessment done early, with a lawyer if there is any doubt, is the difference between a clean separation and a claim.