One of the most common questions Australian SME owners ask is: "Should I hire casuals or part-timers?" The answer affects your payroll costs, leave liabilities, rostering flexibility, and legal obligations. In 2026, with the updated casual employment definition, it's more important than ever to get this right.
1. Key Differences at a Glance
| Feature | Casual | Part-Time |
|---|---|---|
| Hours | Irregular, no guarantee | Fixed, agreed in advance |
| Casual loading | 25% on top of base rate | None |
| Annual leave | No | Yes (pro-rata) |
| Personal/carer's leave | No (unpaid only) | Yes (pro-rata) |
| Notice of termination | None required | 1–4 weeks |
| Redundancy pay | No | Yes (if eligible) |
| Superannuation | Yes (no minimum threshold) | Yes |
2. The True Cost Comparison
At first glance, casuals seem more expensive because of the 25% loading. But once you factor in leave liabilities, the picture changes:
For an employee paid a base rate of $30/hour working 20 hours/week:
- Casual: $30 × 1.25 = $37.50/hr. No leave accrual. Annual cost: ~$39,000.
- Part-time: $30/hr. Plus annual leave (4 weeks = ~$2,400), personal leave (10 days = ~$2,400), leave loading (17.5% of annual leave = ~$420). Annual cost: ~$36,000 + ~$5,200 in leave = ~$41,200.
The total cost is often similar. The real difference is flexibility vs predictability.
3. The 2026 Casual Definition
Under the Fair Work Act, a casual employee is one where there is no firm advance commitment to continuing and indefinite work according to an agreed pattern. Key indicators of genuine casual employment:
- The employee can accept or refuse shifts.
- There's no guaranteed hours from week to week.
- The roster varies based on business needs.
If you roster a "casual" for the same shifts every week for months, they may actually be a part-timer entitled to leave — regardless of what their contract says.
4. Casual Conversion Rights
After 12 months of regular and systematic work, casual employees of non-small businesses (15+ employees) have the right to request conversion to permanent (part-time or full-time) employment. Small businesses (under 15 employees) must still offer conversion if requested, but have more grounds to refuse.
5. Which Should You Choose?
- Choose casual if your work is genuinely seasonal, project-based, or demand fluctuates significantly (e.g., hospitality, events, retail during Christmas).
- Choose part-time if you need reliable, recurring hours and want to build employee loyalty and retention (e.g., admin roles, bookkeeping support, regular clinic staff).
- Consider a mix — a core of part-timers for stability, with casuals for peak periods.
Key Takeaways
- Casuals get 25% loading but no leave; part-timers get leave but no loading.
- Total costs are often similar — the real choice is flexibility vs stability.
- A "casual" working regular, predictable hours may legally be a part-timer.
- Casual conversion rights apply after 12 months of regular work.
- Use a mix of both for optimal cost and flexibility.