Preparing to Engage Workers – Employment Types

Work is busy, your business is going great, but you are working huge hours.  Someone suggests that you should employ staff.  You think about it and finally realise that unless you start saying no to business, employing staff is the only way to go.  But where do you start?

The first step to look at is the different types of employment, from Permanent or fixed term employees to contractors and sub-contractors.

Employees

When you hire people as employees the following happens:

  • They receive payment as wages or salary
  • You, as the Employer, take their tax out of their wage or salary
  • They are based at your business, work at your home or are mobile
  • They Can be full-time, part-time, apprentices, trainees or casual
  • They can be directed when, what and how to do a task

Employees can be hired as either Permanent Employees or Fixed Term Employees.

Permanent Employees are employed on an ongoing basis until either the Employer or Employee terminates the relationship.

Fixed Term Employees are employed for a fixed amount of time or for a specific task.  When that time period is up or task is completed, employment ceases.

Full-time Employees

A full-time employee has ongoing employment and works, on average, around 38 hours a week.  They usually work a standard day, for example, Monday to Friday 9am – 5pm. The actual hours of work for your employee in your industry is set out in your award or registered agreement.

Part-time Employees

A part-time employee has ongoing employment and works, on average, less than 38 hours a week.  The hours are usually regular each week.  A part-time employee has the same benefits as a full-time employee (such as sick leave and annual leave), but on a pro-rate basis based on their hours of work.

Casual Employees

A casual employee has no guaranteed hours of work, they usually work irregular hours, they don’t get paid sick leave or annual leave.  Employment can end without notice, unless notice is required by a registered agreement or employment contract.

Casual employees are entitled to a higher hourly pay rate compared to full-time and part-time employees.  This is called ‘casual loading’ and is paid in-lieu of them receiving sick leave or annual leave.

They are also entitled to 2 days unpaid carer’s leave and 2 days unpaid compassionate leave per occasion.  And unpaid community leave.

Casual employees are considered long term casual employees after 12 months and therefore it is assumed that their regular employment will continue.  They can then request flexible working arrangements and also take parental leave.

Differences between, Casual, Full-time or Part-time

  • Full-time Employees
    • Have ongoing employment (or a fixed term contract)
    • Can expect to work regular hours each week – around 38 hours
    • Are entitled to be paid sick leave and annual leave
    • Must receive or give notice to end employment
  • Part-time Employees
    • Have ongoing employment (or a fixed term contract)
    • Can expect to work regular hours each week – less than 38 hours
    • Are entitled to be paid sick leave and annual leave
    • Must receive or give notice to end employment
  • Casual Employees
    • Can be asked to work at short notice
    • Work irregular hours
    • Don’t get paid sick leave and annual leave
    • Don’t need to give or receive notice to end employment (unless stated in their agreement)

Changing between Casual, Full-time and Part-time

An employer can change their staff member from their current employment basis to something else at any time if they and their employee both agree to it.

If they are changing from full-time or part-time to casual then the usual rules for ending employment apply, including:

  • Giving or paying the employee the required notice
  • Paying out leave and any other entitlements owed

If an employee doesn’t agree to change, the employer can still elect for the change to happen, they just need to make sure that the following important factors are considered:

  • Does the employment contract, registered agreement or award let the employer change the employee’s work hours with the employee agreeing?
  • Does the change make a new employment contract or change an existing contract?
  • What entitlements, such as annual leave or redundancy, need to be paid out?
  • How much notice does the employer need to give the employee?

Shift Workers

A shift worker is an employee who works shifts and gets an extra payment for working shift hours.   An award, enterprise agreement or other registered agreement will have a specific definition of what a shift worker is, and what type of shifts they can work, if at all.

Daily Hire Employees

You can hire a daily hire employee if you are in the building and construction industry and also in the plumbing industry.  Employees must be notified that they are employed as a daily hire employee before employment begins.

Daily hire employees are similar to full-time and part-time employees, they still get the same entitlements such as sick leave and annual leave.  Other entitlements they get are:

  • They receive a follow the job loading. This loading is part of their hourly pay rate and compensates for time that they aren’t working between jobs.
  • They are entitled to give or receive 1 days notice to end employment
  • A tradesperson will be allowed 1 hour before termination to collect, clean, sharpen and transport their tools.

Apprentices can’t be employed on a daily hire or casual basis

Weekly Hire Employees

Weekly hire employees can be full-time or part-time employees and can include apprentices.  They have the same entitlements as other employees.  Employees must be notified that they are employed as a daily hire employee before employment begins.

Outworkers

Outworkers are employees or contractors who perform their work at home or at a place that wouldn’t normally be thought of as a business premises.  Outworkers are common in the textile, clothing or footwear industry.

Most Outworkers are covered by the Modern Awards, but if they aren’t they get at least the minimum entitlements for the National Employment Standards and relevant award rate or the national minimum wage.

Apprentices and Trainee Employees

Apprentices and trainees may be employed on a full-time or part-time basis, they can be of any age and may already hold a qualification.

An Apprenticeship or Traineeship is a training contract between the employer and the employee where the employer provides training and the apprentice learns the occupation or trade.  At the end of the training the apprentice gains a nationally recognised qualification.

Labour Hire – Employment Agency Staff

This is where you hire a staff member through an employment agency, where the employment agency employs the worker and you pay the agency for the use of the worker for an agreed number of ours or for a set period.

Aspects of this are:

  • You can hire people at short notice with specific skills or for short or long-term projects
  • Workers are usually short term, so they may not develop a loyalty to your business and may take their knowledge with them
  • The agency pays the workers wages and other entitlements
  • The agency will charge you a commission, agency or finders fee, which will add extra expense.

Contractor or Independent Contractor

When you hire people as contractors or independent contractors the following will happen:

  • They don’t receive wages, but invoice you for their work
  • They run their own business with an Australian Business Number (ABN)
  • They have their own insurance
  • They set their own tasks and once the task is done, the engagement ends
  • They can work for more than one customer
  • They can subcontract their work to others
  • They provide their own equipment and work from their own base.

It is really important to make sure you understand the difference between an Employee and a Contractor.  I have written a blog previously, so go and have a look at this blog before you go about employing someone – Employee Vs Contractor.

So that is the first step when employing staff, selecting what they are going to be employed at.  If you are having trouble choosing this, email me at blog@askthebookkeeper.com.au.




Please note: I reserve the right to delete comments that are offensive or off-topic.

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