Casual vs Permanent Employment: Understanding Your Leave Entitlements

Published: December 2024 | Reading time: 10 minutes

Australia's workforce includes millions of casual employees, making up roughly one-quarter of all employed people. Yet many workers remain confused about the practical differences between casual and permanent employment, particularly regarding leave entitlements. This matters because your employment type fundamentally affects your access to annual leave, personal leave, and other crucial benefits.

This comprehensive guide breaks down the key differences between casual and permanent employment, helping you understand your current entitlements and whether a change in employment status might benefit you.

What Defines a Casual Employee?

Under Australian law, a casual employee is someone who accepts a job offer knowing there's no firm advance commitment to ongoing work with an agreed pattern. This definition, refined by recent legislative changes, focuses on the nature of the employment relationship at the point of offer.

Key characteristics of casual employment include:

• No guaranteed hours of work
• Work may be irregular or varied
• No advance commitment to continuing employment
• The ability to accept or decline shifts
• Receipt of casual loading instead of leave entitlements

Permanent employees, whether full-time or part-time, have ongoing employment with predictable hours and access to the full range of National Employment Standards entitlements.

Annual Leave: The Key Difference

The most significant difference between casual and permanent employment relates to annual leave. Permanent employees accrue four weeks of paid annual leave per year (pro-rata for part-time workers). Casual employees do not accrue annual leave at all.

This means a casual worker who takes a week off receives no pay for that week, while a permanent employee taking the same week off continues to receive their regular income. Over a year of full-time work, this difference amounts to four weeks of pay, a substantial benefit that permanent employees receive and casuals do not.

Use our annual leave calculator to see exactly how much leave you would accrue as a permanent employee based on your working hours.

The Casual Loading Compensation

To compensate for the lack of leave entitlements and other benefits, casual employees receive a "casual loading" on top of their base hourly rate. This loading is typically 25% under most modern awards, though it can vary.

The casual loading is designed to compensate for:

• No paid annual leave
• No paid personal/carer's leave
• No paid compassionate leave
• No paid public holidays (unless worked)
• No notice of termination or redundancy pay

Whether the 25% loading adequately compensates for these lost benefits depends on your individual circumstances. For long-term employees with consistent hours, the value of annual leave and job security often exceeds the casual loading.

Other Leave Entitlements Compared

Personal/Carer's Leave

Permanent employees receive 10 days of paid personal/carer's leave per year. Casual employees can take unpaid carer's leave of up to 2 days per occasion and unpaid compassionate leave, but receive no paid personal leave.

Compassionate Leave

Permanent employees receive 2 days of paid compassionate leave per occasion. Casual employees can take 2 days unpaid.

Public Holidays

Permanent employees receive their ordinary pay for public holidays they don't work. Casual employees only get paid if they actually work on the public holiday.

Parental Leave

Both casual and permanent employees can access unpaid parental leave if they've worked for their employer for at least 12 months.

Long-Term Casual Employment

Many casual workers end up in arrangements that look suspiciously like permanent employment: regular shifts, predictable hours, and ongoing work week after week. While this might seem beneficial, it can mean missing out on the entitlements that come with permanent status.

The Fair Work Act now includes casual conversion provisions that address this situation.

Casual Conversion Rights

Under current legislation, if you've been employed as a casual for at least 12 months and worked a regular pattern of hours for at least the last 6 months, you may have the right to convert to permanent employment.

There are two pathways to conversion:

Employer Offer

For employers with 15 or more employees, they must offer casual conversion to eligible employees within 21 days of the employee's 12-month anniversary. The offer should be for permanent employment that reflects the employee's regular working hours.

Employee Request

Eligible casual employees can request conversion to permanent employment. The employer can only refuse on reasonable business grounds, such as significant changes to the employee's position being necessary.

Which Employment Type is Better?

Neither casual nor permanent employment is inherently better; the best choice depends on your circumstances:

Casual employment might suit you if:

• You want maximum flexibility in when you work
• You're studying or have other commitments
• You prefer higher immediate pay over future benefits
• You're working multiple jobs
• The work is genuinely seasonal or irregular

Permanent employment might suit you if:

• You want job security and predictable income
• Paid leave for holidays and illness is important to you
• You're planning to stay with the employer long-term
• You need access to certain benefits like mortgages that require permanent income
• You value work-life balance and guaranteed time off

The Financial Calculation

Let's compare the financial outcomes of casual versus permanent employment for an employee working consistent full-time hours:

Permanent employee:
Base rate: $30/hour x 38 hours x 52 weeks = $59,280
Plus 4 weeks paid leave included = $59,280 total

Casual employee:
Base rate with 25% loading: $37.50/hour x 38 hours x 48 weeks (excluding 4 weeks unpaid) = $68,400
But loses 4 weeks income if taking equivalent time off

In this example, the casual appears to earn more, but only if they never take time off. Once you factor in actually taking holidays, the difference narrows considerably, and the permanent employee gains job security and other benefits.

Making the Right Choice

If you're currently casual but working regular hours, it's worth seriously considering whether permanent employment would better serve your needs. The right to request conversion exists precisely because long-term casual arrangements often disadvantage workers.

Consider speaking with your employer about your options, and don't hesitate to contact the Fair Work Ombudsman if you believe you're entitled to conversion but facing resistance.

Conclusion

The difference between casual and permanent employment in Australia is substantial, particularly regarding annual leave and other paid entitlements. While casual loading provides some compensation for lost benefits, long-term casual workers often find that permanent employment offers greater overall value, especially when job security and guaranteed time off are considered.

Understanding these differences empowers you to make informed decisions about your employment arrangements and ensure you're receiving all the entitlements you deserve.