Are you a casual employee and wondering what is casual loading? In addition to their fixed hourly rate, casual employees may receive additional payment per hour. Casual loading refers to this additional payment. An important consideration to make when thinking about what is casual loading is that casual loading is in the range of 15% to 25% of their hourly rate.
Typically, this is a kind of compensation as casual employees typically lack many entitlements that full-time or part-time employees enjoy. Generally, casual employees receive a higher rate of pay as well as they do not get many of the other benefits. Who are casual employees? According to the definition that the Fair Work Ombudsman provides, a casual employee is:
- someone who is offered a job that does not include any firm advance commitment that the work will continue indefinitely with an agreed pattern of work
- they accept the offer being aware that there is no firm advance commitment and become an employee.
The Fair Work Act mentions above points in relation to casual employees. In this article, we will discuss important points in relation to the question ‘what is casual loading?’
Who Is a Casual Employee?
While the section above explains two points to define a casual employee, Section 15A of the Fair Work Act (2009) provides the detailed meaning of casual employee. According to subsection (1) of Section 15A, a person is a casual employee of an employer if:
- an offer of employment that the employer makes to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
- the person accepts the offer on that basis; and
- the person is an employee as a result of that acceptance.
Moreover, subsection (2) states that for the purposes of subsection (1), in determining whether, at the time the employer makes the offer, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
- whether the employer can elect to offer work and whether the person can elect to accept or reject work;
- whether the person will work as required according to the needs of the employer;
- whether the description of the employment is that of casual employment;
- whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.
What is a fair work instrument? According to the Act, a fair work instrument means:
- a modern award; or
- an enterprise agreement; or
- a workplace determination; or
- an FWC (Fair Work Commission) order
Note that a person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:
- the employee’s employment is converted to full-time or part-time employment under Division 4A of Part 2-2; or
- the employer accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.
Long-term casual employees can enjoy some rights such as the right to request flexible working arrangements for instance.
What Is Casual Loading?
As mentioned above, casual loading is an additional payment that employers make to casual employees apart from their fixed hourly rate. Full-time employees or permanent employee enjoy many entitlements and benefits in the form of paid personal leave, paid carer’s leave, paid annual leave, redundancy pay and payment for public holidays in some instances. However, casual employees do not enjoy these casual employment rights or entitlements and the casual loading payments offer some form of compensation.
How to Calculate Casual Loading?
What is casual loading and how to calculate it? The amount of casual loading is based on the specific modern award or enterprise agreement. Let us consider an example where Jay, a casual employee, receives an hourly rate of $25. The present national minimum wage since July 1 2023 is $23.23.
Suppose Jay’s enterprise agreement specifies a casual loading rate of 25%, Jay would receive $6.25 as part of casual loading payment. This means his total hourly payment would be equal to $31.25 [$25 (hourly wage) + 6.25 (25% of hourly wage)].
Importance of Seeking Advice from Employment Lawyers
In this article, we have explored the question of “what is casual loading?”. Employment lawyers have a deep understanding of all rules and regulations related to employment. Employment related legal matters can be extremely complex to deal with.
For example, issues such as unpaid wage, unfair dismissal or workplace harassment are serious matters that you should deal with properly. Moreover, if you want to make legal claims for any of these matters, it is best to seek legal advice.
For more information, reach out to our team of employment lawyers.