It’s important that business owners know and understand the differences between the different types of employment. Each employment type has different requirements which Fair Work requires employers to adhere to and be aware of. Let’s explore these in a bit more detail.
- Full Time Employees
Full time employees are those who work on average of 38 hours per week and are employed in an ongoing capacity. Working hours are fixed by the employer or their award. Full time employees are entitled to receive all leave entitlements as applicable by their Award or Agreement.
- Part Time Employees
Part time employees work on average less than 38 hours per week and have regular hours they work. For example, Julie works a total of 12 hours per week on Monday to Wednesday between 9am and 1pm. The hours of work are fixed by the employer and can be changed in consultation and with sufficient notice from the employer or employee. Part time employees receive the same entitlements as a full-time employee, but these are pro rata, based on their hours. A part time employee can be permanent or on a fixed term contract.
- Fixed Term Employees
Fixed term employees are employed for a period of time or for a specific project or task. These contracts end at the duration of the work, or as stipulated in the employment contract. For example, fixed term contracts can be used for extended leave such as maternity leave, where you may have an employee off for a period of 12 months. Remember: always include an end date in your Employment Contract for fixed term employees. Make a reminder a month prior to follow up and review the contract. You may need to extend the contract end date, and this will give you time to consult with the employee.
Fixed term employees can be full time or part time and receive the same entitlements, pro rata. The only difference is that they receive the entitlements only for the duration of the contract and will be paid out any required leave when they finish.
- Casuals
Casual employees are those who work as required, they have no guarantee of hours. Casuals can work irregular or regular hours depending on the role. Casual employees are not entitled to receive entitlement such as paid leave, however in some circumstances, can be entitled to unpaid leave. Casuals are paid at a higher rate to compensate for their lack of entitlements, this is called a casual loading. It is especially important to call out this loading as a separate line item on the payslip. Casuals aren’t required to be given notice of termination (unless stipulated in their award, agreement or contract), but it is always good practice to do so if you can.
Examples of when to hire a casual:
The business requires someone to help complete filing and scanning to help the team clear a backlog of work and admin. The business asks Jan to come in for a few hours each day for one week to help out.
Alternatively, the business knows that in a month they will have a lot of work to complete and Jan can assist. Jan is asked to work Monday to Friday 9am – 2pm for 2 months to assist the team.
- Contractors
Contractors, also known as independent contractors, run their own business, have their own ABN and insurances, and sometimes their own staff. They will negotiate their rates and working arrangements with the business, work on agreed tasks, and invoice the business. Contractors can work for more than one client. There are numerous requirements that contractors need to comply with, which need to be assessed prior to engaging a contractor, so as to avoid so-called ‘sham contracting’, which is illegal.
Knowing the differences between various types of employees and employment arrangements is important. It will help you to understand and plan what resources you need to fill gaps in your business, and what employees are entitled to. If you have any questions or would like to find out how we can help your business with understanding Employment Types, contact one of our friendly HR consultants today.
Useful links:
https://www.fairwork.gov.au/employee-entitlements/types-of-employees
https://www.fairwork.gov.au/find-help-for/independent-contractors