From the day you hire your first employee, you need to understand how your employee can be engaged. This way you can accurately advertise for a fixed-term, casual, permanent or other position when the time comes.
Having a complete understanding of the varying types of employment engagements is vital to your business.
In particular, you need to understand the particular engagement of your employees, the most common of which include casual, permanent, and fixed-term employees.
The employment contract should reflect the type of engagement which the employee will be employed under, as well as the employment conditions that are agreed between the employer and employee.
Keep reading to learn about different some common employment engagements, along with some of the most frequently asked questions about employment status.
Types of Employment
Not all employment engagements are the same. Each type of employment engagement brings with it a different set of obligations for the employer and rights for the employee. Are you confident you know the difference between full-time and fixed-term, part-time and casual?
The following information is general in nature. The applicable Modern Award or enterprise bargaining agreement may provide different entitlements and definitions than discussed below.
Permanent (Full time or Part time)
Permanent employment is the most common employment type in Australia. The term ‘permanent employment’ covers both full-time and part-time employees.
It is common for permanent employees to agree in advance to employment conditions including that they will work certain days and hours for the company on an ongoing basis until their employment is terminated one way or another (via resignation, redundancy, dismissal for misconduct, etc). This means they can expect to work regular hours each week for an indefinite period of time.
Permanent employees are entitled to various entitlements including, but not limited to, paid annual leave, paid sick leave, paid long service leave and notice of termination. In many cases, these entitlements might be applied on a pro-rata basis for part-time employees.
Fixed-Term
Fixed-term employees have the same entitlements as a permanent full-time or part-time employee. Their employment differs from that of permanent employees in that the contract is for a fixed-term (e.g. 12 months) or for the duration of a specific project as opposed to an ongoing employment arrangement. The contract for a fixed-term employee states directly when the term of employment will end.
Fixed-term employees are often engaged to cover for an absent employee (e.g. as maternity leave cover), to fill a human resources gap, or staff a big project. Typically, fixed-term contracts will run anywhere from a few months to a year, however, can also be for as long as a few years.
Fixed-term employees have the same rights under the applicable industrial instrument as permanent employees such as leave entitlements and allowances.
Casual
Casual employment has been determined by the courts and it will depend on the manner in which the casual employee is engaged if they are casual or not ie whether the employment is ad hoc, or if there is a firm advance commitment of ongoing employment.
The contract for a casual worker may outline the business hours of operation, however, generally should not include any guarantee to ongoing work (unless a Modern Award or enterprise bargaining agreement provides otherwise). This means that contract should not provide a minimum or maximum number of hours per week.
Want to know more about Casuals?
There has been a recent Court ruling regarding the status of casual employees. Download our free guide to find out more
Temporary Employment
You can hire temporary employees to meet temporary business demands.
Temporary employees often come in the form of a new fixed-term or casual employee or may be engaged as a contractor.
The fixed-term and casual employment types provide employers with the flexibility to more easily manage the uncertainty of temporary employment. If you’re thinking about making some temporary hires, this article outlines the pros and cons of fixed-term and casual staff.
Keep in mind that the applicable Modern Award or enterprise bargaining agreement may contain specific provisions for hiring temporary employees.
If you are wanting to engage a contractor to fulfil your temporary needs, then you should review your contractor arrangements to identify any risks of sham contracting. Find out more about sham contracting here.
Key Differences Between Permanent, Casuals, and Fixed Term
Permanent employees arguably have the strongest job security of these three types of employment. They have a contract that states their agreed hours and are expected to attend work for their contract hours (when not on leave or another approved absence).
Permanent employees are entitled to most of the commonly known workplace entitlements – including paid leave and notice of termination, amongst other things.
Both permanent and regular and systematic casuals become entitled to claim unfair dismissal after their minimum employment period. Permanent employees, in contrast, have an expectation of ongoing work from their initial engagement, whereas casuals do not.
Casuals do not generally have access to paid leave and in some circumstances may not have access to unfair dismissal provisions as discussed above. Employers have much more flexibility with regards to giving casuals notice of termination. Employers do not generally need to give casual employees notice, however may need to be cautious of minimum engagement periods in Modern Awards.
However, casuals are entitled to casual loading (generally 25% on top of minimum hourly rate) and do not have to be available to work.
Employees on fixed-term contracts have some of the same entitlements as permanent employees in equivalent roles. If the employee has not been engaged on back to back contracts and their employment is ended in line with the specific end date or project as outlined in their employment contract, they should not have access to unfair dismissal.
If you are still unsure, get peace of mind by speaking to an Employsure specialist for free advice today on 1300 651 415.
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When you understand the difference between employee status’, you can start hiring purposefully.
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Here is an infographic outlining the different types of employment contract: fixed term, casuals and permanent (full-time and part-time).
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Frequently Asked Questions
Are Fixed-Term Employees Entitled to Benefits?
Fixed-term employees have the same entitlements as a permanent full-time or part-time employee under the applicable industrial instrument as permanent employees such as leave entitlements and allowances.
How Many Times Can You Renew a Fixed-Term Contract?
There is no specified limit to how often you can renew a fixed-term contract.
Fixed-term employees have most of the same rights as permanent employees such as leave entitlements and Award allowances. However, if there have been a series of renewals and the employer then does not renew the contract there may be an unfair dismissal risk.
Are Fixed-Term Contract Employees Entitled to Annual Leave?
A fixed-term contract employee is entitled to annual leave, accrued at the same rate as an equivalent part- or full-time employee.
What is Permanent Part-time Employment?
Permanent part-time employment means that the employee works, on average, less than 38-hours per week, and on a regular and ongoing basis. Although the definition may vary depending on your Modern Award.
This is as opposed to a fixed-term, part-time employee, who does not work on an ongoing basis, and a permanent, full-time employee, who works on average, 38-hours a week.
Do Casual Workers Need a Contract?
Whatever is agreed at the time the employee was employed will determine whether the employee is a casual or not even if they have worked a regular pattern of work ever since they started. This means that the job offer and the employment contract should be in writing and clearly state whether the employment is casual or not. The causal employment contract should also clearly state what entitlements are off-set by the casual loading as that will be used by a Court to determine what amount is till owing after it has been reduced by the amount paid in causal loading.
What is the Difference Between Casual and Part-Time Employment?
A part-time worker will have an expectation of ongoing employment and regular hours and these hours will, on average, less than 38 hours per week.
A casual worker, on the other hand, has no guaranteed hours of work, and often works irregular hours, but does have an entitlement to casual conversion.
The two employment types also have different entitlements when it comes to paid leave; part-time employees can access paid annual and sick leave, for instance, while casuals can only access unpaid carer’s leave. Casuals may also end employment without notice.
The above information is general, and may differ according to the applicable Modern Award, enterprise agreement or contract.
Can a Temporary Employee Become Permanent?
Casual Conversion is an entitlement that some casuals have that now forms part of the National Employment Standards (NES). 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.
Do Temporary Employees Get Benefits?
What benefits an employee gets will depend on whether the Employee is Fixed term or Casual. Fixed-term employees have the same entitlements as a permanent full-time or part-time employee under the applicable industrial instrument as permanent employees such as leave entitlements and allowances. Casual employees are entitled to a casual loading, but do not have access to paid annual leave or sick leave, for example.
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