SLC’s Top Five Series: Different types of staff: what, how and importantly – why?
- What is the make-up of your staff – permanent, full time, part time, fixed or maximum term, casual, contractors? What is the difference and why would you engage staff differently?
Here are our top 5 tips on planning your workforce in engaging different types of staff:
- Permanent Employees: these are employees who are engaged on a permanent basis, either full time or part time. Full time employees are typically engaged for 38 hours per week, plus reasonable additional hours. Part time employees can be employed for any amount of time less than full time – it may be a set number of hours or days or it may vary. Permanent employees should be engaged via an employment contract, and may also have an industrial instrument such as a Modern Award apply to their employment as a matter of law, depending on the work they do and the industry they are in. The Award will set out minimum terms and conditions which must be complied with by employers. Award-free employees will also be afforded minimum terms and conditions which must be complied with by employers, as set out in the National Employment Standards (NES). Some employees may be covered by an Enterprise Agreement if the workplace has one in place. Permanent employees receive benefits such as annual leave, long service leave, parental leave, notice and redundancy pay. They also have responsibilities in relation to acting in the interests of the employer, good faith and confidentiality. Permanent employment can only be brought to an end by the employee resigning or being terminated by the Employer – bearing in mind any requisite notice period in the contract (or any longer period required under the Fair Work Act 2009 (Cth) “the Act”), as well as adherence to any other requirements under the Act. Employers will also want to minimise any risk of unfair dismissal, discrimination and general protection law claims being made by a former employee relating to the termination of their employment.
- Employees engaged for a fixed or maximum time or for a specified task: if you know you don’t need to engage a permanent employee, but need some extra help for a defined period or a defined task, then engaging a fixed term or maximum term employee may be appropriate. This could be for a particular project or task. These employees are still considered employees under the Act. They receive many of the same benefits and have the same obligations as permanent employees, but the employment can be brought to an end at the completion of the task or expected time period without the requirement for redundancy pay or additional notice to be paid. There are some risks in this approach, and sometimes an employee engaged as a fixed or maximum term employee may actually be considered or “deemed” to be permanent, depending on the contract terms and the nature of the actual employment. It’ salways best to seek advice before going down this path.
- Casual employees: These are employees engaged on an ad-hoc basis with no guarantee of ongoing work, and typically, no regular or systemic hours. Casual employees can refuse any request to work, and the employer is not obliged to provide work to them on any given day or week. A good example is a casual engaged to help-out at Christmas time in the retail industry, or a casual teacher – engaged on short notice at sporadic times. Casual employees are not entitled to many of the benefits provided to permanent employees, but receive a casual loading on top of their hourly rate to compensate them for missing out on these entitlements. There has been a lot of case law in relation to casual employees recently and it is important for businesses to regularly review who they have engaged on casual contracts, consider whether those contracts are up to date, and to ensure employees are still truly casuals. If any of your casuals have been with you for a long time and/or been working relatively regular hours/shifts, then it might be time to get some advice as to whether the relationship should be reviewed. Modern Awards also provide for casuals to be able to request to convert to permanent employment.
- Contractors: These are staff who are NOT employees of the business, but rather are third parties engaged on commercial terms. It is important to get the engagement of contractors right. It can be unclear as to whether a staff member is a true contractor or a deemed employee. Setting-up the arrangement correctly from the beginning can assist with this. Contractors can be consultants, agency workers or third party companies who provide their staff to assist with certain work. A true contractor is responsible for their own taxes, insurances, often provide their own equipment, are in control of when and where work is done and are responsible for any employment-related benefits for their own employees. True contractors would not be paid a wage or salary but would charge an agreed fee and invoice the business for services performed. Ideally contractors will have their own business or ABN and be free to work for other businesses also. It is important to seek advice when looking to engage contractors.
- Why do businesses engage people in different ways? Why would you choose one method over another? Generally, it depends on the workforce planning needs of the organisation. Employees are subject to your direction and control, are paid wages/salaries/remuneration and can accrue employment-related benefits. They are generally committed to the organisation and have duties to act to the benefit of the employer. Employing someone is investing in them, and they in you. Employees are typically counted in headcount and the business is responsible for paying PAYG tax and Superannuation. Casual employees and contractors provide businesses with flexibility to scale up or down the workforce more easily depending on workload. Often casuals and contractors may receive greater payments than permanent staff for work done or services performed, but they don’t enjoy the certainty of ongoing work, nor certain benefits like paid leave. Engaging contractors can also assist businesses to utilise specialist skills for a period of time or particular task. It is important to get the engagements correct up front to ensure people are being engaged appropriately for the benefit of the staff member and the business, and to save headaches down the track.
If you need help with your workforce planning needs, please reach out for advice.
Contact us:
trish@sydneylegalconsulting.com.au
