Changing an employee from full-time to part-time and your legal duties

Most employers assume they can simply cut a full-time employee's hours when the workload drops. In Australian employment law, you cannot. A contract of employment is changed by agreement, and the shift from full-time to part-time alters a fundamental term of that contract. Reduce an employee's hours without their consent and you may face a breach of contract claim, an unfair dismissal application, or a general protections claim under the Fair Work Act 2009 (Cth) (FW Act).

This article sets out the obligations on an employer that wants to move a full-time employee to part-time: getting genuine consent and documenting the change, consulting as the applicable award or enterprise agreement requires, responding properly when the employee is the one asking for fewer hours, and running a genuine redundancy rather than a disguised one if the change is forced by restructuring.

Who these obligations apply to

The duties below bind every national system employer, which covers most private sector businesses in Australia, from sole traders to large companies. The FW Act is the starting point, but your precise obligations depend on three things:

Business size: An employer with fewer than 15 employees is a small business employer under s 23 of the FW Act. That matters for unfair dismissal (a 12-month minimum employment period applies instead of six months, and dismissals consistent with the Small Business Fair Dismissal Code are not unfair) and for redundancy pay (see below). The general protections against adverse action apply to small businesses in full.
Award or enterprise agreement coverage: Most employees are covered by a modern award or an enterprise agreement. These documents define what full-time and part-time mean for your workplace, set consultation obligations, and can add to minimum entitlements.
Length of service: Whether an employee can bring an unfair dismissal claim at all, and what redundancy pay they are owed, depends on how long they have worked for you.

The first and non-negotiable duty is consent. Employment contracts do not change by employer direction. A unilateral cut to an employee's hours is a breach of the contract you both signed, and it can be treated as a dismissal in disguise.

Under s 386(1)(b) of the FW Act, an employee who resigns because they were forced to do so by the employer's conduct is treated as having been dismissed. The principle comes from the Full Court of the Industrial Relations Court in Mohazab v Dick Smith Electronics Pty Ltd [1995] IRCA 625, which held that where the employer's conduct leaves the employee no real choice but to resign, the resignation amounts to a termination at the employer's initiative. If you cut a full-time employee's hours to two days a week and they resign rather than accept it, a tribunal may well treat that as a dismissal you have to justify.

The compliant approach is straightforward in outline:

Put the proposal in writing: Explain exactly what changes, including the new hours, the pay impact, and how entitlements will be affected.
Give the employee time to consider: The employee should have a real opportunity to ask questions. A signature extracted under pressure is not genuine consent.
Document the agreement: A signed variation letter or a new contract is the evidence you will need if the arrangement is later disputed. The Fair Work Ombudsman recommends written agreements for changed working arrangements.
Keep continuity of employment intact: Done properly, a change from full-time to part-time is a variation of the same contract, not a termination and re-hire. That matters for entitlements: with continuous employment, accrued annual leave carries over rather than being paid out, and continuous service keeps counting for long service leave (which is governed by state and territory legislation) and for future redundancy pay.

Duty two: consult before you change hours

Consent is not the only step. If a modern award or enterprise agreement covers the employee, you will usually have a legal duty to consult before changing their hours.

Modern awards must include a consultation term covering changes to an employee's regular roster or ordinary hours of work. Under s 145A of the FW Act, that term must require you to give the employee information about the change, invite them to give their views on its impact (including on family or caring responsibilities), and consider those views. Enterprise agreements carry a similar obligation under s 205, which also requires consultation about major workplace changes likely to have a significant effect on employees.

Consultation is not a box-ticking exercise. The Fair Work Commission has made clear that consultation must be genuine and not perfunctory. If the consultation clause requires you to meet and discuss before deciding, then decide and then meet again, follow that sequence. Where there is no award or agreement, the statutory consultation duty does not arise, but consulting anyway is cheap insurance against a later claim that the change was sprung on the employee.

Duty three: respond properly when the employee asks for part-time hours

Many full-time to part-time transitions start with the employee, not the employer. Employees in specified circumstances have a statutory right to request flexible working arrangements, which includes reduced hours, under s 65 of the FW Act.

An employee can make a written request if they have 12 months' service with you and one of the listed circumstances applies, such as being pregnant, being the parent or carer of a child of school age or younger, being a carer, having a disability, being 55 or older, or experiencing family and domestic violence.

When a request comes in, your obligations are precise:

Respond in writing within 21 days of receiving the request: A failure to respond is itself a breach under s 65A of the FW Act.
You can only refuse on reasonable business grounds: Discuss the request with the employee and genuinely try to reach an agreement on alternative arrangements first. Reasonable business grounds include excessive cost, impracticality, significant loss of efficiency or productivity, and significant negative impact on customer service.
A refusal must be in writing with reasons: Include the grounds relied on and how they apply to the request, and information about disputing the decision.
Understand the dispute mechanism: If you refuse and the employee disputes it, the Fair Work Commission can conciliate, and if that fails it can arbitrate and make binding orders, including requiring you to grant the request.

This pathway matters because it is the employee-side route to part-time work. If the employee has a statutory ground and you cannot point to genuine reasonable business grounds, refusing and then imposing your own reduced-hours arrangement is a high-risk combination.

Duty four: if the employee refuses, restructure only through genuine redundancy

What if the business genuinely cannot sustain the full-time role and the employee will not agree to part-time hours? You cannot force the change. The lawful route is to make the role redundant, and the redundancy must be genuine.

Under s 389 of the FW Act, a dismissal is a case of genuine redundancy only if:

the employer no longer requires the employee's job to be performed by anyone because of changes in the operational requirements of the enterprise; and
the employer has complied with any consultation obligations in the applicable award or enterprise agreement.

Critically, a dismissal is not a genuine redundancy if it would have been reasonable in all the circumstances to redeploy the employee, including within an associated entity. The Fair Work Commission looks at whether there was an identified, suitable alternative role.

If the redundancy is genuine and properly run, the employee is not unfairly dismissed, and you can then offer them a new part-time role, which they are free to accept or decline. If they decline, you owe:

Redundancy pay: Under s 119 of the FW Act, redundancy pay is calculated on continuous service: four weeks' pay for between one and two years' service, six weeks between two and three years, seven between three and four, eight between four and five, and ten between five and six, continuing to scale with service. Awards and enterprise agreements can provide more.
No redundancy pay: This applies if the employee has less than 12 months' continuous service or you are a small business employer, per s 121 of the FW Act.
Notice or payment in lieu: Provide notice or payment in lieu, and pay out any accrued but untaken annual leave.

The warning that belongs in every redundancy conversation: redundancy is not a mechanism for forcing someone to part-time. If the same work is still being performed by anyone, or the employee could reasonably have been redeployed, the redundancy is not genuine, and the dismissal becomes an unfair dismissal risk. The Fair Work Ombudsman describes unfair dismissal as dismissal that is harsh, unjust or unreasonable, and that is exactly how a court is likely to characterise a redundancy manufactured to shed hours rather than a role.

Duty five: never change terms for a prohibited reason

You must not reduce an employee's hours, or dismiss them, for a reason the FW Act protects against. The general protections in Part 3-1 of the FW Act prohibit adverse action taken because the employee has, has not, or proposes to exercise a workplace right.

Under s 342 of the FW Act, adverse action includes dismissing the employee, injuring them in their employment, altering their position to their prejudice, and discriminating between employees. A workplace right includes making a complaint or inquiry about their employment, participating in proceedings, and being entitled to the benefit of a workplace law or instrument.

So a full-time employee who has asked for flexible hours, complained about pay, or raised a safety issue cannot be moved to part-time in retaliation. Nor can the change be made for a discriminatory reason tied to a protected attribute such as pregnancy, family or caring responsibilities, age, or disability. If the change is imposed in any of these circumstances, the employee can bring a general protections claim, and in practice you will need to explain and evidence the real reason for your decision.

What happens if you get it wrong

The consequences of handling a full-time to part-time change badly are not theoretical:

Unfair dismissal: If the employee is dismissed (including constructively, by being forced to resign) and the dismissal is harsh, unjust or unreasonable and not a genuine redundancy, the Fair Work Commission can order reinstatement, or compensation in lieu, capped at a maximum set in the FW Act. Employees with the minimum employment period (six months, or 12 months for a small business) can apply.
General protections claims: Compensation for loss, and penalties for the contravention. The Fair Work Ombudsman litigates these matters: in April 2024 the Federal Circuit and Family Court imposed $74,590 in penalties against the University of Melbourne for adverse action against two casual academics. Maximum penalties are set by reference to penalty units, which are indexed and have been increasing.
Breach of contract and underpayment claims: If you cut hours and pay without agreement, the employee can sue for the shortfall, and the FWO can pursue underpayment recovery.

Compliance checklist

If you are planning to move an employee from full-time to part-time, work through this list:

Review the source documents: the employment contract, the applicable award or enterprise agreement, and any workplace policy on flexible work.
Check for a flexible work request already on foot: Deal with it first and properly.
Propose the change in writing: Give the employee a genuine opportunity to consider and respond.
Consult as the award or agreement requires: Do so before any decision is finalised, and record the consultation.
Obtain and document the employee's written consent: Use a signed variation letter or a new contract.
Confirm continuity of employment: Leave and service entitlements should carry over rather than being paid out.
If the employee refuses: Stop. Consider redeployment options, and only then assess whether the role can be genuinely made redundant, following the consultation obligations first.

Where a lawyer helps

An employment lawyer's value here is mostly in the planning, before anything is put to the employee. A practitioner will review the award and enterprise agreement to identify the consultation clause and its sequence, check whether the employee has made a protected flexible work request, assess whether a proposed redundancy would withstand scrutiny on redeployment, and draft the variation letter or new contract so that continuity of employment is preserved. If the employee disputes the change, a lawyer can advise on whether the dispute is better managed as a contract variation, an unfair dismissal matter, or a general protections claim, and can represent you in the Fair Work Commission if it gets that far.

Start with the consultation clause, not the termination letter

The mistake that costs employers most in this area is treating a full-time to part-time change as an administrative formality. It is not. The sequence the law expects is consent or a genuine restructure, and the single most useful first step this week is to open the applicable award or enterprise agreement and read the consultation clause, because it dictates everything that must happen before you so much as raise the idea with the employee. Get the sequence right and the change is a routine variation. Get it wrong, and the same change becomes an unfair dismissal or adverse action claim with reinstatement, compensation, or penalties attached.