When hiring new staff, there are several employment arrangements to choose from. One of the biggest workforce dilemmas hiring managers face is deciding between casual and permanent employees.
It’s important to weigh your decisions carefully – your choices can have wide-ranging implications in your business. This guide explains the key differences between permanent and casual staff, helping you make your next hire the perfect hire.
Casual vs permanent employees
The key difference between casual and permanent employment is that a permanent employee has an expectation of ongoing work.
When it comes to permanent employees, many modern awards require employment contracts to outline set days and hours, as well as specific start and finish times.
A casual is generally employed with no firm advance commitment to regular or ongoing work. Because casuals are only given shifts based on the needs of the employer, their workdays and hours are often irregular.
Casual employees
An employee is considered a casual if they accept a job offer without the employer giving any firm advance commitment to ongoing work or an agreed work pattern.
For example, if an employee is only given hours during busy periods, their roster changes each week, and they can refuse or swap shifts, they have likely been hired on a casual basis.
Casual employees are offered no firm advance commitment of guaranteed regular hours. This means the hours worked by casual employees are often more sporadic than those of permanent staff and may fluctuate from week to week, depending on the employer’s needs.
Employers should remember that many modern awards contain minimum engagements for casual staff. This means you must roster or pay a casual employee for a minimum number of hours on each occasion you use them. For more information, refer to the guidelines in the employee’s relevant modern award.
Permanent employees
While casual employees are only given work based on the employer’s needs, permanent employees are contracted to full-time or part-time employment.
Permanent employees and their employers enter into a long-term, ongoing employment relationship, the terms of which are laid out in an employment agreement or contract.
A permanent employee’s work arrangement will likely involve the following:
- Set hours of work each week (either full-time or part-time).
- No specific employment end date.
- A minimum notice period for redundancy or termination of employment.
- Leave entitlements, such as annual leave, personal leave, and in some cases, long service leave.
A permanent employee has a minimum number of guaranteed hours each week. For full-time employees, this is usually 38 hours per week. Anything less than 38 hours per week is classified as part-time employment.
For example, a permanent full-time employee may work 9 am to 5 pm, Monday to Friday, or approximately 38 hours per week over a rotating roster. Regardless of their work times, a permanent employee can expect regular and systematic hours on an ongoing basis.
Hours of work
The most important distinction between permanent and casual employees is the expectation of regular, ongoing, and systematic working hours.
Work patterns
Another significant difference between casual and permanent employees is the pattern of their normal working hours.
A casual employee’s weekly schedule involves irregular hours and will change based on the employer’s needs. This means there tends to be no discernible pattern to the days and hours they work.
Permanent employees tend to work set hours on the same days each week. This work pattern is normally agreed on in writing in the employment contract. There is an expectation that the employee will work the shifts allocated to them on an ongoing basis until they either resign or their employment is terminated.
A casual does not have to work the shifts offered to them by their employer. Instead, they have the right to either accept, refuse, or swap shifts as it suits them.
Employers should be mindful that giving casuals a regular or systematic pattern of work may allow them to access the same paid entitlements as permanent staff.
Additionally, terminating a casual who has had a regular or systematic pattern of work can lead to an unfair dismissal claim.
Wages and pay
When deciding whether to hire permanent or casual employees, it’s always wise to consider the differences in wages and pay.
A full-time permanent employee’s pay is usually based on an annual salary, either outlined in a relevant modern award or employment contract. Part-time permanent employees’ pay will also normally be based on an annual salary but calculated pro-rata based on the number of hours they work.
A casual employee’s pay is based on an hourly rate, with an additional amount included called ‘casual loading‘. Casual loading is extra money paid to casual workers over and above the normal hourly rate that permanent staff receive in the same job (normally calculated at an additional 20-25%).
Casual loading is often seen as compensation for the lack of paid entitlements and job security that come with being a casual worker.
Leave entitlements
As well as wages and pay, it’s crucial to factor in the different leave entitlements that permanent and casual employees receive. These entitlements make up an important part of the long-term cost that hiring a new staff member entails.
In line with National Employment Standards (NES), a full-time permanent employee is entitled to a minimum of 4 weeks of paid annual leave per year.
A part-time permanent employee is entitled to a minimum of 4 weeks of paid annual leave per year, with the number of hours calculated pro-rata. For example, a part-time employee who normally works 25 hours a week would be entitled to a minimum of 100 hours each year.
A permanent employee’s annual leave is accrued throughout the year based on the hours worked.
Unlike permanent staff, casual employees do not receive any entitlements to paid annual leave. Because they have the right to refuse shifts, they are free to take time off work whenever they choose. However, this time away is unpaid and needs to be budgeted for by the casual.
Personal leave
In line with the Fair Work Act and NES, full-time employees should receive 10 days of paid personal leave per year (also known as sick or carer’s leave). The paid personal leave part-time employees receive is calculated pro-rata (1/26 of an employee’s ordinary hours of work in a year).
A modern award, registered agreement, or employment contract may offer more paid personal leave, but it should never be less than the amount specified by NES.
Much like annual leave, a permanent employee’s personal leave accrues throughout the year.
Unlike permanent staff, casuals are not entitled to paid personal leave. If they’re unable to work due to illness or another personal issue, they simply don’t get paid.
Paid family and domestic violence leave
All employees can access 10 days of paid family and domestic violence leave each year. This includes permanent and casual employees.
Paid family and domestic violence leave also come from the minimum entitlements of the NES. A new employee’s paid leave entitlement is available immediately and renewed on their work anniversary. However, if this leave is unused it doesn’t accumulate from year to year.
Compassionate leave
All employees, including permanent and casual staff, are entitled to compassionate leave when a member of their immediate family dies or suffers a life-threatening illness or injury.
Permanent employees are entitled to 2 days of paid compassionate leave, while casuals receive 2 days of unpaid compassionate leave per occasion.
This leave can be taken as a single 2-day period, 2 separate days, or over any period that the employer and employee agree on.
Termination and redundancy
Employers must have a valid reason for dismissing or terminating a permanent employee, such as poor performance or gross misconduct. The employer is required to give a written notice of termination and meet the notice period laid out in the employment contract or agreement.
When a permanent employee’s job is made redundant, the employer may need to give them redundancy pay (also known as severance pay). Under the National Employment Standards, redundancy pay doesn’t need to be paid in some circumstances, such as if the employer is a small business.
On the other hand, a casual employment arrangement can be ended at any time without notice of termination. If a casual’s job becomes redundant, employers are not obligated to give them any redundancy pay.
Key takeaway
Whether permanent or casual employees are a better fit for your company will depend on your staffing needs and the unique characteristics of your business.
Because casual staff do not have to accept shifts, most employers will build a team of permanent staff to meet their baseline requirements. This can then be supplemented with casuals who act as a safety valve during busy periods.
Hybrid workforce models made up of a mix of full-time, part-time, and casual employees will often give the perfect balance of stability and flexibility.
Grow your business with Peninsula
Small businesses in Australia need to hire different types of employees, casual and permanent. Understanding the difference between these employees is crucial so you can make the right choice for your business. Peninsula has worked with thousands of businesses and employers, helping them in employment relations and workplace health and safety. For free initial expert advide, you can call our team 24/7.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.