Employment Law - What Type Of Employee Am I?

Date: February 13, 2006

Authors: LAC Lawyers

What type of employee am I?

Sometimes people become confused as to exactly which category of employment they fall in to.  Of course there is the permanent employee or the casual or part-time or permanent part-time or even the independent subcontractor.  The real difference between the various categories of employment is whether there is a contract of service or a contract for services.

Employment arises in a number of contexts particularly given the social diversity of our workforce today. Due to job sharing, permanent part-time employees are becoming more and more acceptable in the Australian workforce.  Of course the predominant type of employee is the full time permanent employee on which the majority of businesses throughout Australia rely.  This may have something to do with the fact that 75% of all business transacted throughout Australian is carried out by small to medium enterprises.

Essentially the type of employee that you are is normally set out in a letter of appointment, a contract of employment, an award or other industrial instrument including Certified Agreements or Australian Workplace Agreements or as otherwise agreed with the employer. Irrespective of the documents evidencing employment, employees are often issued with job descriptions or specifications covering the type of work they are required to carry out.  It is becoming more prevalent for employees to be issued with letters of appointment and/or contracts of employment given the deregulation of the Australian workplace. 

Often, employees other than full time employees work fewer hours, although with casuals this may not necessarily be so.  Sometimes there is confusion as to whether casuals and part-time employees are one and the same.  The essential difference between the two is that with part-time employees there is the pre-arranged regularity of the hours of work. In other words, part-time employees work on a regular and systematic basis whereas with casuals there is a certain informality, uncertainty and irregularity of engagement.  It should be pointed out that where casual employment is becoming regular and systematic it may be deemed that the person has become a permanent part-time employee, particularly where they have the expectation of ongoing employment.

One of the most telling differences is that a part-time employee is generally entitled to exactly the same benefits and entitlements as a full time employee except on a pro-rata basis.  Their pay includes sick leave and annual leave and their pay rates are not as high as casual employees.  One of the best ways to distinguish a casual employee from a permanent part-time employee is to look at the appropriate award or  industrial instrument to determine whether they fall within the definition of casual employee. In some cases the employer may have mistakenly described their type of employment as they may not be fully conversant with the legal distinctions between these two classes of employee. 

It is always worthwhile to check the award or industrial instrument governing the type of employment and this applies equally to other categories of employee.  It is extremely important to remember that normally casual employees have no guarantee of work beyond their current hiring which could be for one hour, several hours, one or more days or a week.  Note that with casual employees there is usually a loading built into the rate of pay for casuals to compensate for the lack of permanent employment benefits.  The services of a casual employee can be terminated at any time without notice by either party. 

Under the NSW Industrial Relations Act and the Federal Workplace Relations Act there is no protection given to casual employees as they belong to one of the classes which is expressly excluded from the unfair dismissal regime set out in those acts.  Casual rates of pay are normally 20% higher than standard rates.  Remember with casual employees the work is normally irregular, may involve working on different days of the week, is on an on-call basis, wages are paid following each engagement, loadings are paid to compensate for not being a permanent employee and they may refuse to work for the period specified. 

Where the work of a casual employee becomes regular and systematic such that they work the same numbers of hours per week prescribed for permanent employees, then, under many awards where they work for at least one month or in the case of metal industry workers, where they work for at least 6 months in this way, then they may become permanent employees. Irrespective if they have been employed by the same employer on this basis for an extended period of time they will have a right to long service leave.

Employee or Independent Contractor

Not all people who perform work are employees as some are independent contractors frequently called independent sub-contractors.  The major difference between an employee and an independent contractor is that the former receives a salary or wages for services rendered whilst an independent contractor is a person who carries on trade or business themselves.  The employee provides services under a contract of service and the independent contractor under a contract for services. The concept of control is essential to determining when a person falls into one category or the other.  In some cases the law construes a person as being a deemed employee which has certain consequences for such individuals e.g. in the areas of workers compensation and taxation.   Graphic design and advertising agencies are cases in point as much of the work that they have is subcontracted to other persons to undertake. These subcontracting or independent contracting relationships may arise because the principal contractor who is servicing the client needs to access independent expertise and thereafter manage the outcome.

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