What is casual loading?
Casual loading is additional payment made on top of a casual employee’s fixed hourly wage. Usually, casual loading is 25%, however an Award or Enterprise Agreement (EA) may have a different amount.
Casual employees receive a higher rate of pay to compensate for the fact that they do not receive all the same paid entitlements as a permanent employee, such as annual leave or personal leave.
Note:
The Fair Work Act was amended from 27 March 2021 to include a definition of casual employment. Casuals do not have a firm commitment in advance about how long they will be employed for, or the days or hours they will work. An employee is casual if they are offered and accept employment that does not include a firm advance commitment that the work will continue indefinitely, and that is not based on an agreed pattern of ongoing work.
How to a calculate casual loading rate
To calculate the casual loading rate, you must multiply the hourly rate of a permanent employee by the percentage of the casual loading rate, as stated in the relevant modern award or enterprise agreement.
For example, if a casual worker is paid the current national minimum wage of $23.23 per hour, and their Award or Enterprise Agreement stipulates a casual loading rate of 25%, the calculation would be as follows:
$23.23 (permanent hourly wage) + $5.81 (25% of the permanent hourly wage)= $29.04 (total hourly wage)
Casual employment obligations
As an employer, it is important to be fully aware of your workers’ casual employment rights, including the potential impact of a minimum wage increase. While paying your casual workers the correct wage is vital, you should also be aware of other aspects of your casual employment contract.
Below are a few of the areas that employers should be aware of in relation to casual employment rights:
Hours of work
Casual workers are not guaranteed a set number of hours per work, and they may be required to work irregular hours. This means you can ask a casual worker to work with a shorter notice period, within reason.
On the other hand, casual employees are not obligated to agree to the work each time. However, if they do agree to come into work, you may have to pay them for a minimum number of hours even if they have worked less. This is called a minimum engagement period and is stipulated in the Award or Enterprise Agreement.
Additional pay for hours worked
Like full-time and part-time employees, casuals are also entitled to receive additional payment when they work on public holidays, weekends, and additional hours. Depending on when a casual employee works, they could receive penalty rates or overtime rates.
Payment of overtime and penalties for casuals will vary based on the Award or Agreement. For example, some employees may be entitled to be paid a total of 250% of their hourly rate including casual loading if they work on a public holiday. This amount may be more or less for those covered by a different Award or Enterprise Agreement.
Although rates tables have been added to most awards to help you find the right pay it is still complex. We can help you with calculating overtime pay for your casual employees.
Personal Leave and Annual Leave
Casual employees are not entitled to paid leave, like personal or annual leave, including annual leave loading. However, they are entitled to a range of unpaid forms of leave, such as unpaid carer’s leave and unpaid compassionate leave.
Some casual workers may be entitled to long service leave depending on your state or territory laws.
Termination notice
In most cases, you do not have to give a minimum amount of notice when you terminate a casual employee. Similarly, in most cases, a casual employee does not have to give notice when they resign. There are, however, exceptions in some Awards, Enterprise Agreements, and casual Employment Contracts.
Casual conversion
Casual Conversion is another entitlement that some casuals have that now forms part of the National Employment Standards (NES). In short, if certain conditions are met, an employer has to either offer a casual employee the opportunity to go permanent, or the casual employee has the right to request that their employment type be converted to full-time or part-time. The specific rights depend on the size of the business and will also be impacted by whether or not the relevant employee is covered by an award.
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