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A Guide to Casual Employees
Payroll

A Guide to Casual Employees

By QuickBooks Australia
January 12, 2023

The word "casual job" refers to a variety of employment circumstances where the labour is not permanent (i.e. not ongoing). The main characteristic of casual work is that there is no guarantee of continued employment or of the days, hours, or shifts an employee will work.

This type of work agreement is increasingly common across Australia. Casual employment can be helpful to those looking to work around other commitments due to the potential flexibility or those looking for short-term, temporary employment.

For these reasons, it's common for students to take on casual jobs.

The designation “casual employee” will depend on the agreement between the employer and employee during the hiring process.

Learn more about the status and rights of casual employees and your obligations as an employer to casual employees.

What Is A Casual Employee?

Suppose a person accepts a job offer from an employer knowing that there is no solid advance commitment to continued work with a set shift pattern. In that case, the law considers that person a casual employee.

The Fair Work Act classifies an employee as casual, for instance, if their roster is flexible each week to accommodate their employer's demands and they have the option to decline or switch shifts.

Specifically, under the Fair Work Act, a person is a casual employee if:

  • they are offered a job
  • the offer does not include a firm advance commitment that the work will continue indefinitely with an agreed pattern of work
  • they accept the offer knowing that there is no firm advance commitment and become an employee.

Unpacking the “No Firm Advance Commitment”

4 factors determine whether an employer’s offer includes a no firm advance commitment:

  1. The employer and employee both have a choice whether to offer and turn down shifts respectively.
  2. The employer offers an employee work only when the business is in need.
  3. The employee is specifically described as ‘casual’
  4. The employer pays the employee a higher pay rate for being a casual employee, or a specific pay rate usually designated to casual employees.

When Does A Casual Employee Stop Being Casual?

A casual employee will remain casual unless the employer takes specific actions to alter the work circumstances.

Either the employer terminates employment with the employee or the employee becomes a permanent employee through a part-time or full-time job offer.

A casual employee may become permanent if the employer and the employee acknowledge the employee has worked shifts on a regular and systematic basis for at least 26 weeks. Both parties agree to a change in categorisation to part-time or full-time. This transition is called ‘casual conversion’.

Every new casual employee must receive a Casual Employment Information Statement (CEIS) from their employer prior to or as soon as practicable after beginning their new position.

This document outlines information and details related to their conditions of employment.

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What Are The Rights Of Casual Employees?

Australia's workplace rules provide casual employees with various rights, with some similarities and differences to those of part-time and full-time workers.

Casual Loading

Casual pay rates are often higher than those on part-time or full-time contracts. The higher rate is to compensate for the lack of other entitlements usually included in employment contracts, such as paid holidays and sick leave.

Essentially, the higher rate compensates for the uncertainty of unreliable income week to week and month to month. Many modern awards specify a minimum casual loading of 25 per cent above the standard rate, but this may vary depending on employee circumstances.

Minimum Requirements Of The Workplace

All employers in the national workplace system are subject to the minimum requirements set forth in the National Employment Standards (NES). Therefore, the NES cover all workers, including casual employees:

  • For each occasion that such leave is required, employees may take two days of unpaid caretaker's leave and two days of unpaid compassionate leave.
  • Employees work a maximum of 38 hours per week, plus any ‘reasonable’ additional hours.
  • Casual employees can take community service leave for things like voluntary emergency service or jury duty.
  • Casual employees can take a day off on a public holiday unless the employer ‘reasonably’ requests the employee to work. 

As part of entering into an employment arrangement, the employer must provide a casual employee with their Fair Work Information Statement which outlines details about their employee rights in line with the NES.

Security Vs. Flexibility For Casual Employees

Compared to other types of employment, casual labour offers more flexible working hours. The job's permanence, though, is less guaranteed.

Not all casual employees have the option to set their own hours. An employer would likely give hours depending on their busiest times. If you call in an employee to work, you must pay them at least two hours minimum, even if they end up working less.

Casual workers have the option to decline a shift, but if they do so too frequently, the employer may stop offering shifts to them in the future. This is where some workers may experience stress due to the uncertain nature of the work.

As an employer, you should attempt to treat casual employees fairly, understanding the delicate balance between flexibility and security.

Don't simply prevent casual employees from changing shifts and avoid repeatedly taking shifts away from somebody. Even though flexibility is a benefit to all parties, you need to offer flexibility rooted in a sense of stability. 

Additional Pay

Casual workers have the same rights to overtime pay that full-time and part-time workers do whether they put in extra time, work on the weekend, or on public holidays. A casual employee may be paid overtime rates or penalty rates depending on when they work.

Depending on the award or agreement, different overtime rates and penalties for casual employees will apply. For instance, if they work on a public holiday, some employees may be entitled to a total payment of 250% of their hourly rate, including casual loading. 






Payroll Software from QuickBooks

For every employer, processing payroll can be a challenging undertaking.

However, knowing the details of each payroll component will help you understand the financial situation of your business. Additionally, it can confirm that you continue to comply with all relevant laws.

Throwing casual employees into the mix can seem intimidating as you need to navigate fair payment that may vary from week to week and month to month.

Thankfully, with QuickBooks Payroll powered by Employment Hero, we can take care of the whole process for you automatically. 

No matter the complexity of your payment processes, we ensure compliance and empower employees so that everything goes smoothly. With sophisticated breakdowns and reporting, you can relax as we do the maths and make those reports easily accessible to employees, too.

See how QuickBooks Payroll could work for your business with a free trial today. 

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