A casual employee is one that has no guaranteed hours of work, does not receive paid leave such as annual leave, personal/carer’s leave and long service leave, works irregular hours and can be terminated without notice. In compensation for not receiving the same benefits as full-time and part-time employees, casual employees receive a casual loading.
Casual loading is an additional amount paid to a casual employee above the base rate of pay that is paid to permanent employees. Under the Electrical, Electronic and Communications Contracting Award 2020 (the Electrical Award) the casual loading amount payable is 25% above the base rate of pay.
In a recent determination the Fair Work Commission addressed the issue of how employees, receiving a casual loading, are to be paid when they are working overtime.
Overtime for Casual Employees
The Electrical Award provides that casual employees are entitled to the same overtime provisions as permanent employees.
There are two views on how overtime rates are to be applied to casual employees covered by the Electrical Award:
Historically, the Electrical Award was interpreted to apply the cumulative approach. However in the recent determination, the Fair Work Commission found that the compounding approach should be applied to casual employees covered by the Electrical Award and that it will apply from 20 November 2020.
NECA made submissions to the Fair Work Commission that the compounding approach should not be adopted and that the cumulative approach should be followed, however the Fair Work Commission did not accept NECA’s submissions.
What this means for Employers
From 20 November 2020, employers are now required to apply the compounding approach when calculating the pay of their casual employees who work overtime. This means that the employee is required to pay time and a half, double time and double time and a half on the rate that is inclusive of the casual loading.
A permanent grade 5 licensed electrician is entitled to $25.31 per hour. A casual employee is entitled to $25.31 plus a 25% loading, namely $31.64. When the casual employee works overtime they are entitled to:
Disclaimer: This summary is a guide only and is not legal advice. For more information on Award entitlements, call NECA Legal (WA) Pty Ltd on (08) 6241 6129 or email email@example.com.