Casual vs Part-Time: Which Costs More for Your Business?

This is the question every small business owner in Australia asks when they are hiring, and the answer is never as straightforward as it seems. On the surface, casuals cost more per hour because of the 25% casual loading. But part-timers accumulate leave, get paid public holidays, receive notice of termination, and qualify for redundancy pay. When you add all of that up, the true cost comparison shifts.

This guide runs the numbers using real award rates, accounts for the hidden costs on both sides, and helps you work out which employment type actually costs more for your specific situation.

The Basic Difference

Under the Fair Work Act 2009, the key differences between casual and part-time employment are:

Part-time employees:

• Work regular, predictable hours (fewer than 38 per week)
• Have a written agreement specifying their ordinary hours and days
• Receive all NES entitlements: annual leave, personal/carer's leave, paid public holidays, notice of termination, and redundancy pay
• Accrue leave proportionally based on their ordinary hours

Casual employees:

• Have no firm advance commitment to continuing and indefinite work with an agreed pattern of work (as defined by the Fair Work Act post-Closing Loopholes amendments)
• Receive a 25% casual loading to compensate for the absence of leave entitlements
• Can accept or refuse each shift offered
• Do not receive paid annual leave, personal leave, notice of termination, or redundancy pay (with limited exceptions)
• Are entitled to be absent from work on a public holiday but are not paid for it unless they work

The Hourly Rate Comparison

Under the Hospitality Industry (General) Award (MA000009) at Level 1, the base hourly rate effective 1 July 2025 is $23.23. Here is the direct comparison:

On an hourly basis, a casual costs $5.81 more per hour than a part-timer. Over a 20-hour week, that is $116.20 more. Over a year, that is around $6,042 more in wages alone.

But that comparison is misleading if you stop there.

The Hidden Costs of Part-Time Employment

Part-time employees accrue entitlements that do not show up on the weekly payslip but represent real costs to the business. Here is a breakdown for a part-time employee working 20 hours per week at $23.23/hour.

Annual Leave

Part-time employees accrue 4 weeks of paid annual leave per year (pro-rata). For a 20-hour-per-week employee, that is 80 hours of paid leave per year.

Annual cost: 80 hours x $23.23 = $1,858.40

Plus, most awards require annual leave loading of 17.5% on the base rate during periods of annual leave. Under the Hospitality Award (clause 35.2), the employee can choose between the leave loading or their regular penalty rates during leave — whichever is greater.

Leave loading cost: $1,858.40 x 17.5% = $325.22

Personal/Carer's Leave

Part-time employees accrue 10 days of paid personal/carer's leave per year (pro-rata). For a 20-hour-per-week employee working 4-hour days, that is 40 hours.

Potential annual cost: 40 hours x $23.23 = $929.20

Not all personal leave is used every year, but it accumulates and never expires. The average Australian worker takes about 8.5 days of personal leave per year, so for a part-timer working 4 days a week, expect approximately 7 days used (28 hours).

Realistic annual cost: 28 hours x $23.23 = $650.44

Paid Public Holidays

A part-time employee is entitled to a paid day off on any public holiday that falls on one of their ordinary working days. For an employee working 4 days a week, approximately 7-10 public holidays per year will fall on their ordinary working days (depending on the state and which days they work).

Annual cost (8 public holidays x 5 hours average): 40 hours x $23.23 = $929.20

This is pay for not working. The employee is absent but receives their base rate for the ordinary hours they would have worked.

Notice of Termination

When you end a part-time employee's employment, you must provide notice (or pay in lieu) based on their length of service:

Employees over 45 with at least 2 years of service get an additional week.

Cost for a 20-hour/week employee with 2 years service: 2 weeks x 20 hours x $23.23 = $929.20

This is a one-off cost at termination, but it is a real liability that sits on your books.

Redundancy Pay

If a part-time employee's position is made redundant, redundancy pay is owed based on service length:

Small businesses (fewer than 15 employees) are exempt from redundancy pay. But if your business grows past 15 employees, the exemption no longer applies.

Superannuation

Both casual and part-time employees receive compulsory superannuation at the same rate (11.5% as of 1 July 2025). However, the superannuation base is different because the casual earns a higher hourly rate (due to the loading). This means the employer pays slightly more super for the casual.

Part-time super (20hrs/week, 52 weeks): $23.23 x 20 x 52 x 11.5% = $2,773.74

Casual super (20hrs/week, 52 weeks): $29.04 x 20 x 52 x 11.5% = $3,467.17

Casual super costs $693.43 more per year.

The Full Cost Comparison: Year One

Here is the complete annual cost comparison for a Level 1 employee under the Hospitality Award working 20 hours per week.

Difference: The casual costs approximately $3,153.84 more per year — about 10% more than the part-timer, all else being equal.

But this comparison assumes the casual works every week without fail. In practice, the flexibility to scale casual hours up and down is where the real cost savings emerge.

When Casuals Are Actually Cheaper

Scenario 1: Seasonal demand

A beachside cafe in Byron Bay is packed from October to March but quiet from April to September. If the business hires part-timers for 20 hours a week year-round, it pays for 1,040 hours annually. If it hires casuals for 30 hours a week during the busy season (26 weeks) and 10 hours a week during the quiet season (26 weeks), total hours are also 1,040 — but the business only pays for hours worked, with no leave accruing during slow periods.

Scenario 2: Unpredictable demand

A catering company does not know week to week how many events it will have. Casuals allow it to roster zero hours in a quiet week and 40 hours in a busy week. A part-timer must receive their agreed minimum hours every week regardless of demand.

Scenario 3: Short-term roles

For positions lasting less than 6 months, the leave entitlements that accrue for a part-timer are modest but still represent a cost. The notice period at termination adds further cost. A casual in a short-term role costs more per hour but has no separation costs.

Scenario 4: High turnover roles

If the average tenure in a role is 4 months, the annual leave liability never builds up significantly for any individual employee. In this case, the 25% loading is paying for flexibility the business genuinely uses.

When Part-Time Is Clearly Cheaper

Scenario 1: Stable, predictable hours

A dental practice that needs a receptionist for 25 hours a week, every week, with no seasonal variation. The part-timer's leave costs are predictable and are less than the 25% loading premium.

Scenario 2: Long-tenure employees

An employee who stays for 3+ years as a casual accumulates the full hourly premium every week. The 25% loading compounds over time while the leave entitlements they are missing out on (as a proportion of total cost) remain relatively stable.

Scenario 3: Roles requiring weekend and public holiday work

Casual penalty rates on weekends and public holidays are higher than part-time penalty rates. Under the Hospitality Award, a part-timer earns 225% on a public holiday while a casual earns 250%. If the role regularly involves weekend and public holiday work, the gap between casual and part-time penalty rates adds to the casual premium.

Scenario 4: After casual conversion

Under the amended Fair Work Act (sections 66A-66M), a casual employee who has worked regular hours for 6 months (or 12 months for small businesses) may request conversion to permanent employment. If the employee converts, the employer transitions from paying the loading to accruing leave entitlements — often at a lower total cost.

The Casual Conversion Factor

Since the Closing Loopholes Act amendments took effect, casual conversion is now employee-initiated. An eligible casual can give written notification to their employer that they are converting to permanent employment. The employer can only refuse on certain grounds (such as fair and reasonable operational grounds).

This changes the cost calculation. If you hire casuals expecting to pay the 25% loading indefinitely but a significant portion convert to part-time after 6-12 months, you face:

1. A transition period where you have been paying casual loading AND the employee now starts accruing leave
2. An untested liability for any back-payment claims if the employment was found to not be genuinely casual (though the Closing Loopholes amendments have strengthened protections for employers who rely on the contractual designation)

The practical implication: if you are hiring someone for an ongoing role with regular hours, starting them as part-time is often cheaper than hiring them as a casual and having them convert later.

Penalty Rate Comparison

Casual penalty rates are higher than part-time penalty rates because the casual loading is built into the flat multiplier. Here is the comparison under the Hospitality Award for Level 1.

The casual premium remains roughly constant in dollar terms ($5.81/hr) regardless of the penalty day. But as a percentage of the total rate, the premium shrinks on higher-penalty days.

Decision Framework: Which to Choose

Use this framework to guide the decision:

Choose part-time when:

• Hours are regular and predictable week to week
• The role is ongoing with no defined end date
• The employee works weekends or public holidays regularly
• You want lower total employment cost over a 12+ month period
• You want schedule certainty and mutual commitment

Choose casual when:

• Hours fluctuate significantly week to week or season to season
• You need the ability to roster zero hours in quiet periods
• The role is genuinely short-term or project-based
• You need maximum rostering flexibility
• Demand is unpredictable and cannot be planned in advance

Do not choose casual when:

• The employee works the same hours every week and has done so for months
• You are using casual status to avoid leave obligations for what is effectively a permanent role
• You would refuse a casual conversion request without genuine operational grounds

Frequently Asked Questions

Is casual loading meant to cover leave entitlements?

Yes. The 25% casual loading is intended to compensate casual employees for the leave and other entitlements they do not receive, including annual leave, personal/carer's leave, notice of termination, and redundancy pay. It was calculated to approximate the monetary value of these entitlements.

Do casuals get superannuation?

Yes. Since 1 July 2022, all employees (including casuals) are entitled to superannuation regardless of how much they earn. The current rate is 11.5% of ordinary time earnings. Casual loading is part of ordinary time earnings, so the superannuation is calculated on the loaded rate.

Can I convert a casual to part-time to save money?

The employee initiates conversion under the current law (post-Closing Loopholes amendments). An employer can offer conversion, and an employee can accept. If the employee converts, the casual loading ceases and leave entitlements begin accruing from the conversion date. Prior service as a casual counts towards entitlements like redundancy pay and notice periods.

Is it legal to hire everyone as casual to avoid leave costs?

Technically, you can hire employees on a casual basis. However, if the employment is not genuinely casual — meaning the employee works regular, predictable hours with an ongoing expectation of work — the arrangement may be reclassified. The Closing Loopholes amendments provide more certainty around the definition, but the substance of the arrangement still matters.

What about WorkCover premiums — are they different for casuals?

WorkCover premiums are calculated as a percentage of total remuneration. Since casuals earn a higher hourly rate (due to the loading), the WorkCover premium in dollar terms is higher for a casual than for a part-timer doing the same hours. The premium rate (percentage) is the same for both.

Do part-time employees get penalty rates?

Yes. Part-time employees receive the same penalty rates as full-time employees. They are not paid at a lower rate because they work fewer hours. Penalty rates for part-timers are the full-time/part-time multipliers (e.g., 125% Saturday, 150% Sunday under the Hospitality Award).

Compare employment costs with the AirComply Calculator — enter the award, classification, and expected hours to see the full cost breakdown for casual vs part-time employment.