Casual vs permanent employment – what's the difference
January 12, 2018 | By Charlene Woodbine, Vitil
This is a common question for Vitil's Human Resource Service Perth team from our clients. What is the difference between casual and part time employment, and why does it matter that I correctly classify employees?
The following are typical characteristics of casual employment:
- Casual employees are generally employed on an irregular basis and work unsystematic hours
- Casual employees do not have a set roster and should not know their hours and days of work from week to week
- Casual employees are engaged by the hour and are paid an hourly rate
- A casual employee may decline to attend work if they choose
- A casual employee has no guarantee of ongoing work
- A casual employee does not have an entitlement to annual and sick leave
Permanent employment has the following characteristics:
- Permanent employees can be engaged either on a part time basis (less than 38 hours per week) or on a full-time basis (38 hours per week)
- Have regular and systematic hours week to week
- Have an ongoing expectation of work
- Are entitled to annual and personal leave. If employed on a full time basis, the employee will be entitled to the full leave entitlement after 12 months continuous service. For part time employees, they will be entitled to the same leave provisions, accrued on a pro rata basis
Here are some common questions posed to Vitil's Human Resource Services Team in relation to casual employment:
Q. Can I employ someone on a casual basis to 'test them out'?
A. If the employee has regular and systematic hours (even if it is for a short period of time), they are a part time employee.
Often Perth businesses take this option because they are unsure of how to manage a poor performer. Be reassured that if a new employee is not performing during the probation period, with a proper probation review process, you will be able to manage that employee's performance and in the worst case, not confirm their appointment at the end of the probation period if their performance does not meet your expectations.
Q. If I employ someone 1 day a week, are they a casual?
A. The short answer is no they are not. The determining factor in deciding whether an employee is a casual is whether they have regular and systematic hours. The number of hours they are employed is irrelevant for the purpose of determining casual employment, if those hours are in fact, regular. In this case, this employee would be a part time employee engaged to work 1 day a week typically 7.5 hours.
Q. What happens if the employee wants to remain casual, when they are working regular hours?
A. Generally, the fact that an employee elects to remain casual (typically because they don't want to lose the casual loading) doesn't change their classification to part time. Therefore it is important to ensure that you explain the differences between casual and part time employment and document the responses from the employee. Although this won't eliminate your risk completely, it does evidence your knowledge of the difference between casual and part time employment.
This scenario is common and is fraught with risk for employers. It must be managed carefully to avoid potential claims from the employee. It is strongly recommended that you seek more specific advice in relation to mitigating your risk, with your Human Resource consultant, if this applies to your business.
Q. What are the risks of incorrectly classifying an employee?
A. Incorrectly classifying an employee as a casual employee could lead the employee to make a claim for the leave entitlements that they would have received if they had been correctly classified as a part time employee. The employee could claim a backpay of their entitlements for the period of employment up to a maximum of six years (if their employment exceeds 6 years).
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