Tradesmen Permanent Recruitment: Turning Your Best Contractors into Long-Term Hires

Tradesmen permanent recruitment usually starts the same way. A maintenance fitter or A-class electrician has been on your site through an agency for eight months, knows which line trips at 2am and why, and you want them on your payroll before someone else moves first. You make the offer. They hesitate, then decline.

That refusal is almost never about loyalty to the agency. It is about arithmetic. A contractor compares your salary against the hourly rate on their last payslip, sees a smaller number, and stops reading. This guide covers how manufacturing and industrial employers build an offer that survives that comparison, what a conversion actually costs, what the Fair Work Act now requires, and how to make the switch hold past the first three months.

Key Takeaways

Most tradespeople refuse a permanent offer because the headline hourly rate looks lower, not because the annual package is lower. Model the full year before you name a salary.
Under the employee choice pathway added to the Fair Work Act on 26 August 2024, an eligible casual can notify you in writing after six months of service (12 months in a small business), and you must respond in writing within 21 days.
Temp-to-perm conversion fees are normally a percentage of the first year package on a sliding scale that drops as on-hire hours accumulate, often reaching nil past an agreed threshold.
The Manufacturing and Associated Industries and Occupations Award 2020 (MA000010) sets the floor. A qualified tradesperson sits at C10 or above, and all-purpose allowances such as the tool allowance flow into overtime, leave and superannuation.
The strongest conversion window is straight after a shutdown or a major breakdown the contractor helped resolve, while their value to the site is visible to both sides.

Why Proven Tradespeople Push Back on Permanency

If you have run a permanent recruitment process for a maintenance role and had a good contractor turn it down, the objection usually falls into one of three buckets. Understanding which one you are facing changes the offer you should make.

The Rate Drop That Is Not Really a Rate Drop

A casual on-hire tradesperson sees a flat hourly rate that already contains the 25% casual loading. Converting that to a salary looks like a cut of several dollars an hour. What the number hides is unpaid downtime, unpaid public holidays, no paid personal leave, and no long service leave accrual in a role they may hold for a decade.

Overtime and Shift Loadings

Plenty of contract tradespeople build their income on overtime. A salaried offer that quietly absorbs overtime into an annualised figure reads as a large loss. If your site genuinely runs 43 hour weeks, say so, and price overtime separately rather than burying it.

Autonomy, Exit Speed and Site Politics

Contracting gives a tradesperson a short notice period and distance from internal politics. Some value that more than leave entitlements, particularly after a bad experience with a previous permanent employer. That objection is answered with scope and equipment, not with money: a defined patch, a say in the maintenance schedule, a decent tool allocation.

Model the Total Package Before You Make the Offer

The single most useful thing you can do in trades and services recruitment is put both options on one page in annual dollars. The table below is an indicative model only. It assumes 38 ordinary hours plus five overtime hours a week, a casual who works 46 weeks a year once downtime and unpaid absence are counted, and superannuation at 12% on ordinary time earnings. Substitute your own site figures before you use it in a conversation.

Ordinary hours pay - Casual on hire at $48.00/hr flat: $83,904 (46 weeks worked); Permanent offer at $92,000 base: $92,000 (52 weeks, leave paid)
Overtime, 5 hrs/wk at time and a half - Casual on hire at $48.00/hr flat: $16,560; Permanent offer at $92,000 base: $16,063
Annual leave loading at 17.5% - Casual on hire at $48.00/hr flat: Nil; Permanent offer at $92,000 base: $1,238
Superannuation at 12% - Casual on hire at $48.00/hr flat: $10,068; Permanent offer at $92,000 base: $11,189
Tool allowance, all purpose - Casual on hire at $48.00/hr flat: Inside the flat rate; Permanent offer at $92,000 base: $928
Paid personal or carer's leave - Casual on hire at $48.00/hr flat: Nil; Permanent offer at $92,000 base: 10 days available, roughly $3,500 of cover
Long service leave accrual - Casual on hire at $48.00/hr flat: Rarely portable across hosts; Permanent offer at $92,000 base: Accrues from the first day of service
Indicative annual total - Casual on hire at $48.00/hr flat: $110,532; Permanent offer at $92,000 base: $121,418 plus leave cover

Run the same sheet with the tradesperson in the room. The conversation shifts from "you want to pay me less" to "show me your weeks worked last year", which is a question they can answer honestly. Add anything else that carries real value on your site: income protection, a company ute, paid licence renewals, a training budget toward a dual trade.

How Temp-to-Perm Conversion Fees Work

When you engage a manufacturing recruitment partner on a labour hire basis, the supply agreement will set out what happens if you hire the worker directly. A conversion fee is not a penalty, it recovers the sourcing, screening and compliance cost the supplier carried up front while charging a margin that assumed a longer assignment.

The fee is almost always calculated on the worker's first year total package with you, then reduced by the hours already worked on hire. Indicative commercial terms look like this, and your own agreement is the authority:

Hours worked on hire before conversion: Typical fee basis
Under 250: Full placement fee, a percentage of first year package
250 to 500: Reduced percentage, commonly around two thirds
500 to 750: Further reduced, often around one third
Above the agreed threshold: Nil, or a nominal transfer administration charge

Two practical points. First, negotiate the conversion schedule at the start of the assignment, not the week you want to hire, because your bargaining position is far better before anyone is attached. Second, check whether the fee is calculated on base salary or total package including superannuation and vehicle, since that difference is material. Our comparison of labour hire vs perm recruitment sets out where each model earns its keep.

Casual Conversion and the Employee Choice Pathway

Since 26 August 2024 the Fair Work Act has carried a new definition of casual employee in section 15A, along with a single pathway to permanency known as employee choice. Under it, a casual who has been employed for at least six months (12 months for a small business employer) and believes they no longer meet the casual definition can give their employer written notice of their intention to change to full-time or part-time employment.

The employer must consult, then respond in writing within 21 days, either accepting the change or giving reasons for not accepting it. The permitted reasons are narrow: the employee still meets the casual definition, there are fair and reasonable operational grounds, or accepting would breach a recruitment process required by law. Employers must also issue the Casual Employment Information Statement at the start of employment and again at the six and 12 month marks, then annually.

One point that catches host employers out: where the tradesperson is supplied through the kind of arrangement covered in our seasonal to permanent transition guide, or any other on-hire model provided by a tradesmen labour hire agency, the legal employer is the agency, so the notice goes to the agency, not to you. Your exposure is commercial and operational rather than statutory, but you still need to know it is happening before the person hands in notice.

Award and Classification Issues When You Convert

Get the classification right at the point of offer. Under MA000010, a tradesperson who has completed an engineering trade sits at C10 as a minimum, with C9, C8 and C7 available for post-trade qualifications and special class work. From 1 July 2026 the C10 minimum sits near $29.45 an hour, so almost any realistic market offer clears the award floor. The floor still matters, because it drives the base for overtime, shift loadings and annual leave.

Check three things before the contract goes out. The tool allowance under the award is paid for all purposes, so it lifts overtime and superannuation, not just the ordinary hourly rate. Shift loadings and weekend penalties must be applied correctly or annualised under a compliant arrangement that is reconciled. And any trade licence that gated the contract engagement, such as an Energy Safe Victoria electrical licence or a Victorian Building Authority plumbing registration, needs to be verified again against the permanent position description.

Timing Signals That a Contractor Is Ready to Convert

Hiring skilled tradesmen out of an on-hire pool works best when you read the signals rather than waiting for an annual review cycle. The reliable ones are behavioural.

They have started fixing root causes instead of closing work orders, which means they expect to still be there when the fault returns.
They ask about the capital plan, the new line, or next year's shutdown scope.
They have just come off a successful shutdown or a serious breakdown, when their contribution is fresh in everyone's mind.
Their personal circumstances have shifted, typically a mortgage application or a partner going on parental leave, both of which make income certainty worth more than a rate premium.
They have turned down other assignments to stay on your site.

Onboarding That Makes the Switch Stick

Conversions fail in the first 90 days more often than people admit, and the cause is usually a silent demotion. The tradesperson who ran their own priorities on hire is suddenly inside a permanent structure with a supervisor, a planner and a maintenance system. Treat the conversion as a genuine start date, not an administrative change.

Give them a written position description with a defined asset patch, confirm which overtime is guaranteed and which is offered, set a 90 day review with actual measures such as schedule compliance or mean time to repair, and give them one improvement project they own outright. Where you hire skilled maintenance staff into a team they already worked alongside, name the change publicly so the crew understands the new reporting line. A good permanent recruitment agency will stay involved through the first quarter rather than invoicing and disappearing.

Related Resources

Permanent Recruitment | Licensed Tradespeople | Chandler Personnel Trade Recruitment Agency | Chandler Personnel Manufacturing Recruitment Agency | Chandler Personnel Casual employment changes - Fair Work Ombudsman Manufacturing and Associated Industries and Occupations Award 2020 [MA000010] - Fair Work Ombudsman Victorian Labour Hire Authority Energy Safe Victoria

Frequently Asked Questions

How long should a tradesperson be on hire before I offer permanency?

Three to six months is usually enough to judge fault-finding ability, safety behaviour and how they handle a call-out at 3am. Longer than nine months and you risk a competing offer, or the conversion fee schedule losing you nothing while a rival agency re-rates them.

Can the labour hire agency stop me hiring their worker directly?

No. Restraint clauses cannot prevent a person taking a job. What the supply agreement can do is require a conversion fee or a notice period, so read the clause before you open the conversation and settle the commercial terms with the supplier first.

What salary do I need to beat a $48 an hour casual rate?

On the model above, roughly $90,000 to $95,000 base plus superannuation and overtime is competitive for a maintenance tradesperson working 43 hours a week. The answer changes with your actual weeks worked, overtime volume and allowance structure, which is why the sheet matters more than the rule of thumb.

Does a converted casual keep their accrued service?

Where the worker was employed by a labour hire agency, the service sits with that agency, and your employment starts fresh unless you agree otherwise. Some employers recognise prior on-hire service for personal leave or long service purposes as part of the offer. It is a negotiating lever that costs less than salary.

Who is responsible for licences and tickets after conversion?

You are, from the day they join your payroll. Re-verify the trade licence, any high risk work licence such as forklift or elevating work platform, and site-specific tickets, then diarise the renewal dates. Do not rely on the agency's records continuing to be maintained.

Is a permanent tradesperson always cheaper than labour hire?

Not always. Labour hire carries the cost of replacement, payroll, insurance and downtime risk in the margin. Permanency is cheaper when the workload is stable and the role is core, and more expensive when demand swings or the skill is needed a few weeks a year.

Conclusion

Converting a proven contractor is the lowest-risk hire available to a manufacturing site, because you have already watched the person work under pressure for months. The obstacle is nearly always a poorly framed offer rather than an unwilling tradesperson. Build the annual package comparison, settle the conversion fee with your supplier before you talk to the worker, and confirm the award classification and licences in writing. If you have someone on your site now who you would rather keep, start by asking your supplier for their conversion fee position this week.