Casual vs Permanent Employment: Which Costs More?
One of the most common questions Australian employers face is whether to hire casual or permanent employees. While casual employees appear more expensive due to the 25% loading, permanent employees come with hidden costs including paid leave, leave loading, redundancy provisions, and notice periods.
The 25% Casual Loading
Under the NES, casual employees receive a minimum 25% loading on top of the base hourly rate. This loading compensates for not receiving: annual leave (4 weeks), personal/carer's leave (10 days), notice of termination, and redundancy pay. Some awards set higher casual loading rates.
The True Cost of Permanent Employment
Beyond base pay, permanent employees cost employers approximately 20-40% more when you factor in:
- Superannuation: 12% of ordinary time earnings (applies to both casual and permanent)
- Annual leave: 4 weeks paid leave (employee is paid but not working)
- Leave loading: 17.5% extra on leave payments under most awards
- Personal leave: 10 days paid sick/carer's leave per year
- Redundancy provisions: 4-16 weeks' pay if the position becomes redundant
- Notice periods: 1-4 weeks' notice (or pay in lieu) on termination
When to Hire Casual vs Permanent
Casual is better for: seasonal work, irregular hours, short-term projects, covering peak periods, or when you need flexibility to adjust staffing levels quickly.
Permanent is better for: regular ongoing work, roles requiring training investment, building team culture, and when you need reliable attendance. For regular hours, permanent is often cheaper overall.
Casual Conversion Rules
Since March 2021, employers with 15+ employees must offer casual employees conversion to permanent employment after 12 months of regular and systematic work. This is a significant compliance obligation -- failure to offer conversion can result in penalties. Employers can refuse only on reasonable business grounds.