As an employer in these uncertain times, you might be thinking that it makes more sense to have less full-time staff.
Especially in these uncertain times where most of the country is in lockdown, it might seem wise to cut costs, or reduce the financial burden of employee costs.
Many people who run a business will consider part-time or casual team members, or hiring contractors instead of full-time employees.
In some situations, this can work, however, in others it might be unwise. Depending upon the needs of your business, you have to be smart and know the realities of different types and conditions of employees.
In this article, we will look at several different types of employment options, and how those can work for or against your business.
What Types of Employees Can Work In Australia?
In Australia, there are many different types of employment. These can include:
- Full time (salaried)
- Part time (salaried)
- Casual (hourly)
- Contractor (hourly or project-based)
Between these different types of employees are some crucial differences you need to understand. This will help you decide what the best course of action is for your business in terms of hiring the right type of employees.
Full-Time vs. Part-Time Employees
The two most common forms of employment in Australia are full-time employees and part-time employees. Currently, approximately 62% of Australians work full-time and 36% part-time.
A full-time employee has ongoing employment and works, on average, at least 38 hours each week. The actual hours of work for an employee vary depending upon the job or industry. They are agreed between the employer and the employee, or can be set by a third-party in some industries.
Additionally, a full-time employee receives superannuation payments, and other benefits, such as:
- Four weeks of paid annual leave
- 10 days of paid sick, personal or carers leave
- Two days of paid compassionate leave
- Five days of unpaid family and domestic violence leave per year
- Unlimited unpaid community service leave
A part-time employee in Australia works, on average, less than 38 hours per week and usually works regular hours each week.
They are entitled to the same benefits as a full-time employee, and the benefits are calculated on a pro-rata basis. They are usually considered a permanent employee, or can sometimes be on a fixed-term contract.
Casual employees usually work irregular hours, and are typically paid by the hours they work. They also don’t receive paid sick leave or annual leave. Under the National Employment Standards (the NES), casual employees are entitled to:
- Access a pathway to become a permanent employee
- 2 days unpaid carer’s leave and 2 days unpaid compassionate leave per occasion
- 5 days unpaid family leave (in a 12-month period)
- Unpaid community service leave.
- Superannuation if they earn above the minimum monthly threshold
Employees Vs. Contractors
Contractors run their own business and sell their services to others. Unlike employees who work in your business, they simply provide one-time or ongoing services to the business.
Contractors are sometimes called independent contractors or subcontractors. In most cases they use their own processes, tools and methods to complete the work. Meaning that they aren’t typically instructed by you. They will usually negotiate their own fees and working times as well.
Despite all these differences, contractors still have workplace rights and protections but have different responsibilities relating to insurance, taxation and superannuation. Be mindful not to fall into the category of sham contracting – where employers try to disguise an employment relationship as a contractor relationship in order to avoid paying superannuation, work cover, leave and other taxes.
What To Consider When Choosing A Type of Worker
With all these different options for employees and contractors it can be confusing to know what type you should choose for your business.
Especially in times like these when cash flow and cost are big factors, it can be tempting to simply have a team that costs less money upfront. However, there are benefits and drawbacks to each type.
First, look at the needs of the business. Remember that full-time employees may be more committed and are available more than part-time or casual. Someone who works less or has two or three jobs or is studying part time may have less input into the business, and may be less committed to the company’s mission and success.
Difficulty to Replace or Remove
Other aspects to consider are whether the people you need for your business will be difficult to replace, or if you need to let them go, they may prove difficult to terminate under employment law.
If your business needs skilled and experienced workers, then having full-time employees can be a better match as you are able to better train, motivate and retain them. For less skilled roles, or seasonal needs it might be better to hire part-time or casual employees that require less experience and commitment to the growth of the business.
In some circumstances, there might be specific tasks that are needed once-off in your business, that you can hire a contractor for, and simply let them take care of it.
On the other hand, if you are unhappy with a specific team member’s performance, it can be much more difficult to let go of a full-time employee without repeated written warnings and an often lengthy performance management process.
How to Decide Which Type of Employee You Need
You might want to start by employing staff as casual first, and then moving them to part-time or full-time roles. This strategy can be a great way to train employees for full-time employment.
It also gives you a feel for the team members you are hiring and helps to built trust and loyalty as they move from casual, to part-time, to full-time.