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In Australia, we have something called ‘casual loading’, which is a payment on top of your casual employee’s fixed hourly rate. This article sets out:
- what is a casual employee;
- what is casual loading;
- whether you need to pay casual loading; and
- what else to consider when it comes to casuals.
What is a Casual Employee?
To understand what casual loading is, you first need to understand what a casual employee is. A casual employee is a person to whom you:
- offer employment with no firm advance commitment that the work will continue indefinitely with an agreed pattern of work; and
- accepts the offer of employment on that basis.
What is Casual Loading?
Casual loading is a payment on top of your casual employee’s standard hourly rate. This payment is 25% of their hourly rate. Accordingly, you can think of casual loading as a way to compensate casual employees for the fact that they have no right to certain entitlements. These entitlements include:
- paid annual leave;
- paid personal/carer’s leave;
- payment for public holidays; and
- redundancy pay.
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Do I Need to Pay Casual Loading?
Yes, you need to pay casual loading to a casual employee as it is a requirement by law.
As of 1 July 2022, the minimum rate of pay for casual employees (including casual loading) is $26.73 per hour.
It is important for employers to understand that the law considers casual employees long-term casual employees if they meet certain criteria. Where this is the case, they may have additional rights.
A long-term casual employee is a casual employee who has worked regularly and systematically for you for over a 12-month period. Likewise, they must reasonably expect their engagement to continue.
Regular and systematic work is where the employee works the exact same shifts every week and they reasonably expect the arrangement to continue.
Long-term casual employee’s additional rights include:
- the right to be offered permanent employment (this is called ‘casual conversion’);
- the right to request flexible working arrangements; and
- the right to take unpaid parental leave.
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As an employer, it’s important now more than ever to ensure that you understand your obligations in relation to your casual employees. Therefore, it is imperative that you have factored casual loading into a casual employee’s wages, you have considered any rights your casual employees may have and you have solid employment contracts in place.
If you’re unsure about anything in relation to your casual employees or would like to bring on a casual employee, it’s a good idea to speak to our experienced employment lawyers who can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Casual loading is a payment on top of your casual employee’s fixed hourly rate. This payment is 25% of their hourly rate.
As of 1 July 2022, the minimum rate of pay for casual employees (including casual loading) is $26.73 per hour. However, casual employees may be entitled to a higher minimum rate of pay if they are covered by a modern award or enterprise agreement.
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