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Whilst your casual workers are generally not entitled to the same benefits enjoyed by your permanent employees, they are entitled to a higher rate of pay. Casual loading is a payment you must make in addition to your casual employee’s fixed hourly rate. In a practical sense, casual loading is a percentage rate based on the award or registered agreement that covers your workers. Subsequently, you must multiply your employee’s hourly rate by the percentage of the casual loading rate. To find out more, this article explains who is entitled to casual loading and other casual employment rights. 

Casual Loading

Casual loading is a payment you must make in addition to your casual employee’s fixed hourly rate. You determine this amount by a percentage rate based on the award or registered agreement that covers your workers. Subsequently, when you pay your casual employees, you should multiply their hourly rate by the percentage of the casual loading rate.

The casual loading rate depends on the relevant award, registered agreement or employment contract that covers your employees. However, casual loading is generally 25% of the hourly rate you pay your permanent employees.

In a practical sense, casual loading is a payment you make in lieu of leave entitlements and job security your casual employees do not receive. Although your casual employees do not enjoy the same benefits as your full-time and part-time staff, they may receive penalty rates in addition to casual loading when they work:

  • on public holidays;
  • over weekends;
  • overtime; or 
  • during shift work outside ordinary business hours. 

Again, the relevant award or registered agreement would specify both penalty and casual loading rates.

Who is Entitled to Casual Loading?

In the workplace, your casual employees can receive casual loading. A casual employee is someone who:

  • is offered employment with no firm advance commitment of regular work; and
  • accepts the offer of employment on that basis.

Under the Fair Work Act, casuals do not have a firm advance commitment about the duration of their employment or the days or hours they will work.

In determining whether an offer of employment makes no firm advance commitment of regular work, consider the following factors. Whether:

  • an employer can elect to offer the employee work;
  • the employee can elect to accept or reject the offered work;
  • the employee will work as required according to the needs of the employer;
  • employment is described as casual employment; and
  • the employee will be entitled to a casual loading.

In contrast, your full-time and part-time employees have:

  • ongoing employment;
  • an expectation of work at regular hours each week; and
  • entitlements to paid leave entitlements such as annual leave and personal/carers leave.

Once you employ someone on a casual basis, they continue to be a casual employee until they become a permanent employee. Under the National Employment Standards (NES), you must offer your casual staff the option to convert to a full-time or permanent part-time role if they have:

  • been in your business for at least 12 months; and
  • worked a regular pattern of hours on an ongoing basis for at least the last 6 months of that period. Likewise, they could continue to work as either a permanent full-time or part-time employee without significant adjustment.

Importantly, the obligation to offer casual conversion does not apply to small business employers with less than 15 employees. However, your casual employees may still request casual conversion.

Casual Employment Rights

Beyond paying your casual staff their proper loading rate, you should know your casual employees’ rights.

Overtime, Public Holidays, Weekends and Work Outside Ordinary Business Hours

If your casual workers work on public holidays, weekends, overtime, or work outside ordinary business hours, they may receive penalty rates or overtime rates. 

Given different awards and registered agreements will impose different requirements on you, it is important that you clarify the rates of pay for your casual staff.

Unpaid Leave

Generally, your casual employees have no entitlement to paid leave. However, they may receive a range of unpaid leave like carers leave and compassionate leave. Your casual employees can take carers leave if an immediate family member or household member is sick or injured. On the other hand, your casual workers can use compassionate leave if:

  • an immediate family member or household member dies;
  • an immediate family member or household member develops a life-threatening illness; or 
  • your employee or their spouse has a miscarriage.

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Key Takeaways

Casual loading is a payment you must make in addition to your casual employee’s fixed hourly rate. You can determine the casual loading rate by a percentage based on the award or registered agreement that covers your workers. If you need help calculating casual loading, our experienced employment lawyers 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

What are the National Employment Standards? 

The National Employment Standards set out the minimum standards of employment for all workers under the national workplace relations system in Australia. These standards cover a range of employment topics, from maximum weekly hours to parental leave. 

What is an award?

An award outlines the minimum terms of employment within a specific industry or occupation. For example, the Security Services Industry Award covers minimum work conditions for security guards, such as their wages and penalty rates. 

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