So, you are looking at hiring a new staff member but don’t know where to start?
The decision as to whether you employ an employee on a permanent or casual basis has wide-ranging implications for your employer / employee relationship so it is important to get it right!
This article outlines the key features of both permanent and casual employment to assist you in determining which engagement would be best for you and your business.
Hours of work and patterns of work
The key distinction between permanent and casual employees is the ongoing expectation of regular and systematic working hours.
A permanent employee is guaranteed a minimum number of hours a week. For full-time employees, this is usually 38 hours per week. Anything less than this is classified as permanent part-time employment.
Permanent employees usually work the same hours on the same days each week and do not have the option to refuse to work a shift. There is an expectation that the employee will work the shifts allocated to them on an ongoing basis up to and until they resign or their employment is terminated.
On the other hand, the hours worked by casual employees are often more sporadic and may fluctuate from week to week depending on the needs of an employer. Casual employees are not guaranteed a minimum number of hours each week and are not paid for public holidays unless they are working on these days. They are also able to accept or reject shifts as rostered by you.
The nature of the industry that you work in will likely inform whether you require long-term employees to work regular hours or not. More volatile industries that have ‘highs’ and ‘lows’ in terms of demand, such as hospitality, retail and construction industries, find the casual employment model is more flexible and works better for them. However, industries where there always some level of work available, particularly those in professional or office-based environments, want to ensure that their workers are working a base number of hours each week for an extended period of time.
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Leave entitlements
Permanent employees are entitled to be paid annual leave, personal leave and compassionate leave in accordance with the National Employment Standards (NES). Annual leave and personal leave are accrued on a yearly basis based on the number of hours worked by the permanent employee per week.
However, casual employees are not entitled to any paid leave entitlements. When a casual employee takes time off work, they are simply not rostered on any shifts and are not paid since they are not working.
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Hourly rate
The minimum hourly rate for permanent employees is usually set out in the relevant Modern Award that covers the employee. For award-free employees, the minimum hourly rate must be higher than the National Minimum Wage and will likely be impacted by the age and experience of the employee.
As casual employees are not entitled to paid leave (as noted above), casual employees are usually paid a 25% casual loading on top of their base hourly rate in lieu of these entitlements. This means that casual employees are usually paid 125% of the hourly rate of a permanent employee in the same position.
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End of employment
Terminating a permanent employee is very different to terminating a casual employee.
To terminate a permanent employee, you need to be able to identify the reason for the termination. The reason for the termination will ultimately impact on how much notice needs to be provided to an employee on termination. Permanent employees can work out their notice period or they will need to be paid in lieu of their notice period. After their last day, permanent employees will also need to be paid out all unused and accrued annual leave.
Casual employees can be dismissed, or otherwise resign from their employment, without notice. After their employment ends, a casual employee will no longer be rostered on for any shifts. As casual employees do not accrue paid leave, you do not need to pay them any lump sum on settlement.
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So that’s what’s different, but what’s the same?
Regardless of whether your employee is engaged on a permanent or casual basis, all employees should:
be paid superannuation on top of their hourly rate;
be entitled to long service leave under the Industrial Relations Act 2016 (Qld) or the relevant state or territory long service leave laws;
be covered by your worker’s compensation insurance policy; and,
have a written employment contract which clearly outlines how the employee is engaged (i.e. on a permanent or casual basis) and terms and conditions of their employment.
Key takeaways
The decision to engage an employee on a permanent or casual basis is an important one and will impact your obligations as an employer into the future.
We recommend you take the time to weigh up the needs of your business against the expectations of your prospective employee to make sure you start off on the right foot and engage them correctly.
If you are still unsure whether hiring a permanent or casual employee is right for you or would like some assistance preparing an employment agreement for your new employee, the employment law team at Shand Taylor Lawyers is here to help.
John Sneddon, Director
(07) 3307 4504
Ruby Nielsen, Senior Associate
(07) 3307 4551
Emma Lewis, Lawyer
(07) 3307 4546