As social restrictions move down a notch or two, many employers planning for the reopening of their businesses are asking the question: “How can we reduce costs?”
Many businesses that have not been actively trading for the last few months have bills piling up, so finding real savings is critical. Undoubtedly, one of your greatest business expenses is going to be wages. So, what’s the secret here? How can your business continue actively trading, but at the same time reduce these costs?
Well, let’s start off by asking yourself the following questions:
- Does your business use ‘casual’ employees?
- Are your casuals rostered on a regular and systematic basis, or have they been working for you for a number of years now?
- Do you know what risks are associated with having casuals return to their ‘usual’ rostered working hours?
If you answered ‘Yes’ to the first two questions, and ‘No’ to the last question, then you have a big risk you need to understand and manage. You also have a potential big saving in the making.
The real cost of ‘casuals’
First, casuals should only be brought into your business when you have a high and fluctuating demand for your business’ goods or services, or when one of your permanent employees is away on leave. That is what it means for an employee to be ‘casual’.
Second, casual employees are relatively expensive to maintain when compared to full-time or part-time employees. This is because casuals are entitled to a 25% loading on top of their hourly rate to compensate them for not receiving leave entitlements (such as annual leave and personal/carers leave) and not having the benefit of a predictable and stable income.
Third, recent Court decisions have found that many ‘casual’ employees are in fact ‘permanent part time’ in the eyes of the law, and therefore also have a right to leave entitlements, and access to unfair dismissal laws and redundancy entitlements. This is so if they have:
- A reasonable expectation of ongoing employment; or
- An agreed pattern of work.
Paying annual leave to a casual employee, and being exposed to potential unfair dismissal costs and redundancy payments if you cut their hours, are all significant additional costs to your business, considering you have also paid the same person a 25% loading on all of their pay to avoid this.
So what should you be doing?
If you are actually employing people on a regular basis then recognise that fact now, and put them on permanent part time contracts. Your ongoing remuneration will be lower overall and you won’t end up paying again (and again) at a later time.
You also get another benefit – the right to expect your employees to be available for work on certain days and at certain times. This is one of the obligations that employees owe you back in return for their permanent part time status.
What if you want to keep it ‘casual’?
If you don’t want to move to a permanent part time status, then you need to take extra care to ensure you keep things genuinely casual.
To put this into place we recommend implementing the following measures:
- Provide your casuals with the option to accept or decline a rostered shift. If they are expected to turn up when you tell them, they’re not casual;
- Do not create an expectation of ongoing employment or availability for a particular shift. You avoid creating this expectation by not actually providing them with regular shifts; and
- Following on from the point above, put in place a rostering system that ensures you do not inadvertently provide regular and certain hours.
In a nutshell, you need to properly implement a casual rostering policy. We have a number of pro-forma solutions to either effectively engage your employees on a permanent part time basis, or to ensure that your casuals remain casual.
The key takeaway is that a ‘casual employee’ should not be embedded into your workplace. If they are a permanent fixture, then they are a permanent (and expensive) employee, no matter what you call them.
If you employ casuals and need to implement some cost saving strategies contact JFM Andreyev on (02) 9199 8597.
More information
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The information in this post is current at the date of editing – 20 November 2024.
