A Fair Work Commission draft proposal says businesses should be required to offer casuals a permanent position after 12 months.
Casual workers could be offered permanent roles after 12 months under a Fair Work Commission proposal, which unions say will help tackle an "epidemic" of insecure work.
In a decision published on Wednesday, the commission said a "casual conversion provision" was necessary to make sure employers did not keep people on casual contracts indefinitely.
The commission's draft proposal would require businesses to offer casuals a permanent role if they had been working a pattern of hours equivalent to a full-time or part-time position.
"Some employers do engage indefinitely as casuals persons who under the relevant award provisions may be, and want to be, employed permanently," the commission said its decision summary.
The ACTU had wanted casual workers to be able to shift to permanent roles after six months, but said the commission's decision "plugs one small hole in this epidemic" of insecure work.
"Anything that improves the lives of working people is a step forward. It's a win," secretary Sally McManus told reporters.
The decision covers 85 awards, which Ms McManus said included hospitality, retail, manufacturing, community services, child care and farming sectors.
The commission said businesses could refuse to move casual workers to permanent roles if doing so would require a significant adjustment to the employees' hours or if it was clear their role would cease to exist.
It also reached the provisional view casuals under 34 awards - which did not have a minimum on shift length - should be called in to work for no fewer than two hours.
The ACTU had pushed for shifts of at least four hours for casual and part-time employees.
The Australian Retailers Association and the Australian Industry Group said the commission's decision reduced employer flexibility.
Australian Chamber of Commerce and Industry deputy workplace relations director Alana Matheson said members strongly opposed the unions' plan for a minimum four-hour shift.
"(It) would have made it harder for businesses to give after-school jobs to students," Ms Matheson said.
"This was an anti-jobs proposal from the union movement - it was important that it be rejected not only from the perspective of business but for job seekers and the underemployed."
The commission will hear submissions from business and unions about its draft proposals.