Is it More Advantageous to Hire an Employee on a Casual or a Part Time Basis?

When hiring a new employee it may be difficult to determine whether to hire them on a casual or a part time contract. Each has its benefits and its drawbacks.

Benefits of Casual Employment Contracts as an Employer

Some of the benefits of bringing on a new employee on a casual contract include:

• The ability to roster the employee with irregular hours which can change from week to week. This may be particularly advantageous when running an organisation in the hospitality industry.
• Unless your contract specifies otherwise, you have no obligation to provide guaranteed hours for a casual employee in any given week if business is slow.
• You can terminate a casual employee with no notice and no redundancy pay – this means there is a lower risk of encountering any unfair dismissal claims.
• A casual employee is not entitled to additional benefits such as sick leave, annual leave and public holiday leave.

Disadvantages of Casual Employment Contracts as an Employer

While these advantages may sound appealing, casual employment does have its downfalls:

• Casual employees receive a higher hourly rate than part-time employees and also receive wage loading when they work overtime, on public holidays or on weekends and therefore can be costly.
• A casual employee can resign without having to provide notice.
• Casual employees may reject work or not show up for work which can leave your organisation in the lurch.

Benefits of Part Time Employment Contracts as an Employer

While different to those of a casual employment contract, a part time employment contract also has various advantages:

• Part time employees receive a lower hourly rate of pay than casual employees due to the additional benefits they are entitled to.
• You can roster a part time employee for set shifts and hours each week. This is advantageous when operating an organisation with a steady work load.
• A part time employee will be more invested in the company than a casual employee and as a result will have increased morale and productivity.
• If a part time employee resigns, they must provide you with sufficient notice as set out in their employment contract.

Disadvantages of Part Time Employment Contracts as an Employer

Alongside the benefits listed above, there are also some disadvantages to hiring an employee on a part time basis:

• You will be unable to alter the hours a part time employee is contracted to work which does create a risk of losing money if the hours you require the employee for are reduced but you must still allocate them the agreed hours of work each week.
• You are required to provide additional benefits to part time employees such as sick leave, annual leave, long service leave and public holiday leave.
• When terminating a part time employee you may be required to pay notice upon termination.
• In order to avoid an unfair dismissal claim, you should provide a part time employee with a warning and a chance to improve their performance before opting to terminate their employment.

When deciding in which capacity you will hire new employees you need to consider your business structure, the industry you operate in and whether you require seasonal workers or long-term employees. For example, if you are operating an organisation in the retail sector, it would be preferable to hire additional employees for the busier summer months and holiday period on a casual employment contract so as you can roster them on as needed and end the employment when the extra hands are not required anymore.

If you wish to change the contract an existing employee is employed on, you may do so providing that the employee agrees. You need to ensure that you outline any impact the change will have and any benefits the employee will receive. 

If you require assistance in creating or amending employee contracts please call OpenLegal on 1300 337 997 or fill out the enquiry form below to get a free quote from our experienced employment law solicitors.