different forms of employment
Not every business needs permanent, full-time employees and not all individuals want permanent, full-time employment. Sometimes engaging workers under temporary or part-time employment serves the needs of the business better.
As Australian employers face ongoing shortages of highly skilled talent, many opt to employ independent contractors to carry out specialist projects. Deloitte’s Global Human Capital Trends 2016 suggested this trend will continue as 51% of employers surveyed globally intended to increase the use of contingent workers in the future. This can be a successful strategy for employers, but it’s important to ensure the right contractual arrangements are in place. The jobs marketplace Upwork estimated that around 4 million, or one-third of Australia’s workforce, performed freelance work in 2015
There are a number of different forms of employment, both from an employee and a business perspective. The challenge for managers is to choose wisely and manage people effectively.
permanent employment (full-time or part-time)
These are the most common type of employees, and they have access to the full set of employment rights and responsibilities, such as annual leave, sick leave, and parental leave and payments. Employees are considered full-time or part-time depending on the number of hours they work per week.
A full-time employee will work 38 hours per week, with full holiday leave entitlements, whereas a part-time employee will work less than 38 hours per week, with holiday leave calculated on a pro-rata basis. The Fair Work Commission made changes to part-time conditions under some awards on 12 December 2017.
Permanent employees are employed on an on-going basis until the employer or employee ends the employment relationship.
Temporary employees are employed for a defined period of time to meet the needs of the employer. They may be employed to cover the following:
- short-term cover for absent staff (e.g. sickness, maternity leave, annual leave)
- increase staffing levels during peak demand (e.g. Christmas, summer holidays)
- deal with one-off tasks
- provide specialist skills
- provide cover while staffing levels are changed
- reduce wage costs
- increase flexibility.
Temporary employees can be employed under the following employment contracts:
- freelance, self-employed and independent contractor.
Employees under this contract are employed for a specific period of time or task, e.g. maternity leave, and can be full-time or part-time employees. Full-time or part-time fixed-term employees are entitled to the same wages, penalties and leave as permanent employees. Additional terms and conditions for a fixed term employee may be provided under an award or registered agreement.
A casual employee has no guaranteed hours of work, usually works irregular hours (but can work regular hours), does not get paid sick or annual leave, and their employment can be terminated without notice unless stated otherwise in the employment contract, registered agreement or award.
Casual employees are entitled to ‘casual loading’ - a higher hourly pay rate than full-time or part-time employees - as they do not receive benefits such as sick or annual leave. Casual employees are entitled to two days unpaid carer’s leave and two days unpaid compassionate leave per occasion.
Long-term casuals can stay as casual employees unless they change to full-time or part-time employment. There is no notice of termination or paid leave, even if they work regularly over a long period of time.
Changes were made to casual employee provisions in some awards by the Fair Work Commission on 12 December 2017.
freelancers, self-employed and contractors
Employers may decide to take on a freelancer or independent contractor as a cost-effective way to outsource work to skilled professionals for a specific project or task. The contract between the employer and freelancer/contractor will state very specific terms such as payment, the scope of work, expected outcomes, and a timeframe.
Freelancers and contractors do not receive any of the employment benefits of an employee, however, there is a high level of control in how the work is done. They must pay their own tax (and Goods and Services Tax (GST) where applicable) and superannuation, use their own tools and equipment to complete the contract, and submit an invoice for work completed at the end of the contract or project. See also chapter 5 ‘independent contractors’.