Casual loading is additional payment made on top of a casual employee’s fixed hourly wage. The percentile rate of casual loading is determined by the relevant award or agreement covering that specific job.
Casual employees are entitled to a higher rate of pay as they are not entitled to benefits enjoyed by permanent employees, such as paid sick and annual leave.
To calculate the casual loading rate, you must multiply an employee’s permanent hourly rate by the percentage of the casual loading rate, as stated in the relevant modern award or enterprise agreement.
For example, if a casual employee is paid the current national minimum wage of $19.49 per hour, and their award or agreement stipulated a casual loading rate of 25%, the calculation would be as follows:
$19.49 (permanent hourly wage) + $4.87 (25 per cent of the permanent hourly wage)
= $24.36 (total hourly wage)
As of 1 July 2019, the national minimum wage in Australia is $19.49 per hour or $740.80 per 38-hour week.
The minimum wage or the base wage that is received by employees in the national workplace relations system is determined by a specialist panel within the Fair Work Commission. This is reassessed on an annual basis, and if there are any changes, they come in effect from the first full pay period starting on or after 1 July.
Similar to full-time and part-time employees, when casual employees work on public holidays, weekends, overtime, or outside ordinary business hours, they are entitled to extra pay. This is called penalty rates.
Keep in mind, casual loading on overtime and other instances do vary based on the industry. Some employees may be entitled to a total casual loading of 250 per cent if they work on a public holiday. The amount may be less for those covered by a different award or enterprise agreement.
Many awards and enterprise agreements allow employees to still receive casual loading on top of their penalty rates. This, however, is not always the case. Refer to your relevant award or enterprise agreement for clarification.
As an employer, it is important to be fully aware of your workers’ casual employment rights. While paying your casual employees 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:
Casual employees 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 employee to work with a shorter notice period, within reason. On the other hand, casual employees are not obligated to say yes each time.
Casual employees are not entitled to paid sick or annual leave. However, they are entitled to a range of unpaid forms of leave, such as unpaid carer’s leave and unpaid compassionate leave. Some casual employees may be entitled to long service leave depending on your state or territory laws.
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.
Employsure can help you determine the correct casual loading rate for your casual employees. For peace of mind, please call our 24 hour Advice Line now on 1300 651 415.