January 15, 2021

Photo by Bench Accounting on Unsplash

Should I hire a casual or part-time worker?

Many business owners mistakenly think that hiring and classifying a worker as a casual is a safe bet because they can simply stop giving the employee any shifts if things don’t work out and be done with them without any consequences. 

This isn’t the case. 

Casuals have certain rights and we’ll explain these below along with some guidance on how you can choose which worker is best for your business. 

In a hurry ? jump ahead below. 

Let’s start with the characteristics of a casual employee and go from there. 

Casual worker characteristics

Your casual worker is going to work in this way: 

  • without any guarantee of work hours 
  • irregular work hours (i.e. no pattern of Tues, Wed weekly etc) 
  • doesn’t get paid sick or annual leave 
  • employer can end their employment without notice, unless notice is required by a registered agreement, award or employment contract. 


Unpaid casual worker leave entitlements

While your casual workers are not paid for leave, they are entitled to: 

  • 2 days unpaid carers leave
  • 2 days unpaid compassionate leave per occasion 
  • 5 days unpaid family and domestic violence leave (in a 12-month period) 
  • unpaid community service leave 


Long term casuals 

If a casual has been on your books for 12 months or more, then they are a long term casual and are entitled to: 

  • request flexible working arrangements
  • take parental leave. 


Casuals may have the right to convert to full-time or part-time 

Your casual worker may have the right to request to convert to full-time or part-time employment after a certain period. You’ll need to follow the rules that apply in any applicable award about casual conversation.  


Casuals can apply for unfair dismissal

Casual employees may apply for unfair dismissal if they meet certain requirements like having worked a minimum period of 6 months (if your business has 15 or more employees) and also if they have worked for your business on a regular and systematic basis. 

Regular and systematic means that they can show a pattern of work over the past 12 months or more. 


When will a casual worker will suit ?

If you have an unpredictable workflow, a casual is suitable for your business. 

An unpredictable work flow means that because demand for your business offering fluctuates, you don’t know how many workers you’ll need on a particular day. This is typically the case for retailers but may also be the case for many other businesses as well. 


Guidance for when not to hire a casual worker 

You should not hire a casual worker if you know you need them on set days of each week or most weeks because it's not the correct classification. 

If you know you need a worker for a set number of days per week, for  

example, if you know that you’ll need  your worker Tuesday and Wednesday each week and those hours aren’t going to fluctuate week to week, then your worker should be a part-time employee, and yes, part-time employees do get paid entitlements. 


What’s the difference in entitlements ?

Casual workers

A casual worker is paid a base rate just like part-timer and full-timer with a 25% loading on top. The extra amount is called a casual loading. The reason it's paid is to make up for the fact that these workers don’t get annual leave or sick leave and their hours aren't certain. 

Also, the loading makes it worth a workers time to come into work if they have been called in at the last minute. 

Part time workers

A part-time worker gets a pro rata of a full-time worker’s entitlements. 

For example, a part time worker that works 2 days per week is paid 40% of a full-time worker’s entitlements. The calculation is simply 2 days / 5 days = 40%. 

So, for annual leave, this means 40% x 20 days = 8 days of annual leave per year. 

And, for sick leave, this means 40% x 10 days = 4 days of sick leave per year. 


Awards

Be sure to check the Fair Work Ombudsman website to see if an award applies for your industry so you can read about entitlements for both casuals and part-time workers. 

An award sets out an employee’s minimum entitlements and you can use the award as a guide for choosing. 

If you need more guidance choosing, seek advice. 


What sort of advice do I need ?

It’s a good idea to get legal then accounting advice, and in that order. 

Why ?

A lawyer can listen to your plans about how you’d like to utilise the worker in your business and help you classify whether your worker should be either a casual worker or part-time worker. 

An accountant can then help you with budgeting, forecasting for wages, taxes, superannuation and setting up your payroll system including payslips. 

Of course, after your initial consultation with a lawyer and accountant, it’s a good idea to check in if work circumstances change and you aren’t sure if a casual classification is will be right going forward. 


Golden tip

While there is plenty of information to consider when choosing your worker, to avoid any overwhelm, it’s best to start with an understanding of how often you need your worker in your business.  

If you aren’t sure how many days a week you’ll need the worker, then a casual classification may be right, but consider if the casual worker is on for 12 months or more whether they will have the right to switch to part-time or full-time per any Award that applies. 

Accountants and lawyers can also guide you with your decision. 

Do you have questions or comments about hiring workers ? Be sure to leave them below.





About the author 

Vivian Michael

As founder and lawyer at Michael Law Group, CPA and owner of a business consultancy, Vivian is well-positioned to advise Australia's top entrepreneurs. Entrepreneurs benefit from Vivian's commercially focussed legal advice, business experience, and commitment to deliver the best quality business legal services to entrepreneurs, wherever they may live in the globe.

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