How to set an hourly rate for casual workers
For many small business owners, hiring workers on a flexible basis is ideal – especially if paying regular salaries isn’t in the budget and/or the workload is variable.
Depending on where you live and operate your business, you need to be aware of the rules when it comes to paying your casual workers.
These guidelines can help you get started with understanding how to calculate a fair hourly rate for casual staff.
What defines casual employment?
Casual workers are employed in the most flexible of arrangements. With no commitment of regular guaranteed hours, they may work strictly on-call and are free to accept, refuse, or swap a shift when it is offered.
There are a number of drawbacks to casual employment. Casual workers aren’t entitled to the same paid benefits as regular employees, such as annual leave, parental leave, or sick time. They also lack the day-to-day predictability of a regular work schedule and guaranteed earnings.
To their benefit, unless required by contract casual workers are not required to give formal notice to end their employment.
For workers who are unable or unwilling to commit to regular employment, casual work can be the perfect fit. It can also work out great for small business owners whose budget may only afford help at busy times of year or on a project-to-project basis.
Pay entitlements for casual employees
For casual employees, a higher hourly rate than you’d pay your part-time or full-time employees who perform the same work is standard. Typically, casual employees are entitled to a percentage of pay on top of their regular hourly earnings in lieu of paid benefits (i.e. sick time or holiday pay).
As a starting point for determining your legal requirements when hiring casual workers, talk to your federal agency in charge of employee rights and employer obligations. You might also want to research minimum wage and competitive pay rates for the kind of work in question when deciding on a fair hourly rate for casual workers.
Other legal obligations as an employer
Hiring a casual worker doesn’t mean you can be “casual” about how you manage your flexible employees. Casual employees must be treated to the same standard as any other employee when it comes to training, outlining duties, and communicating expectations – and you must act in accordance with employee rights and employer obligations in your jurisdiction at all times.
Be sure to talk to your accountant about your legal requirement to deduct and/or withhold tax for casual employees, and whether you may be required to pay superannuation (i.e. there may be a threshold amount of earnings for casual workers to qualify for contributions).
Casual workers often feel more vulnerable than other employees hired by the same business. Because of their flexible work arrangements, they may feel their job is insecure and that they lack status among regular salaried employees – so they may not want to “rock the boat” by asserting their rights.
Whether you decide to hire casual staff for seasonal work, to finish a project, or fill your occasional staffing needs, find out what your obligations are so you stay on the right side of the law – and treat all of your employees with the same respect and fairness.