Casual Loading

What is casual loading?

Casual loading is an extra payment added to the hourly rate of casual employees in Australia. It's a legal requirement and a key differentiator between casual and permanent employment.  Essentially, it compensates casual workers for not receiving the benefits that permanent employees enjoy, such as paid annual leave, sick leave, and notice of termination.

This loading is usually 25% of the base hourly rate, but it can vary depending on the specific industry award or enterprise agreement that covers the employment. For instance, if a casual employee's hourly rate under their award is $20, a 25% casual loading would mean an extra $5 per hour, bringing their total hourly rate to $25.

Why is casual loading important?

Casual loading offers advantages for both employers and employees. For employers, it provides flexibility in managing their workforce, allowing them to scale staffing levels up or down based on business needs without the obligations associated with permanent employment.

On the other hand, employees benefit from a higher hourly rate, which can be particularly attractive for those seeking short-term work or who value flexibility over the security and benefits of permanent employment.

Calculating casual loading

Rates current from 1 July 2026.

Determining the casual loading amount for your employees is a straightforward process. Here's a step-by-step guide:

1. Identify the base hourly rate

‍Start with the hourly rate a permanent employee would receive for the same role. This information can usually be found in the relevant industry award or enterprise agreement.

2. Determine the casual loading percentage

‍The standard casual loading rate is 25%, but it's important to confirm this percentage within the applicable award or agreement, as it might differ.

3. Calculate the casual loading amount

‍Multiply the base hourly rate by the casual loading percentage. For example, if the base rate is $26.44 (the national minimum wage from 1 July 2026) and the casual loading is 25%, the calculation would be:

$26.44 x 0.25 = $6.61 (casual loading amount)


4. Add the casual loading to the base rate‍

To find the total hourly rate for the casual employee, add the casual loading amount to the base hourly rate:

$26.44 + $6.61 = $33.05 (total casual hourly rate)


Casual loading calculation example

Let's say you're employing a casual retail worker in Australia. The relevant award states a base hourly rate of $25.00 and a casual loading of 25%. Here's how you'd calculate their hourly rate:

✔ Base hourly rate: $25.00

✔ Casual loading percentage: 25%

✔ Casual loading amount: $25.00 x 0.25 = $6.25

✔ Total casual hourly rate: $25.00 + $6.25 = $31.25

Therefore, the casual retail worker would be entitled to an hourly rate of $31.25.

Employer responsibilities for casuals

Casual employees offer flexibility, allowing you to adjust staffing according to business demands. You can typically ask casual workers to work with shorter notice and offer them shifts that vary in length and timing. However, it's important to remember that casual employees also have the freedom to accept or decline shifts as they choose.

Minimum engagement periods

While casual employees aren't guaranteed a set number of hours, many awards and enterprise agreements stipulate a minimum engagement period. This means that if you call a casual employee in for a shift, you must pay them for a minimum number of hours, even if they work less. Always check the relevant award or agreement to understand your obligations.

Penalty rates and overtime

Casual employees, just like part-time and full-time staff, are entitled to penalty rates for work on weekends, public holidays, or outside regular hours. These rates can vary significantly depending on the applicable award or agreement. For instance, a casual employee working on a public holiday might receive 250% of their regular hourly rate, including casual loading. Accurate calculation of these entitlements is essential to ensure fair compensation.

Leave entitlements

Unlike permanent employees, casual workers don't generally accrue paid leave such as annual leave or sick leave. However, they are entitled to unpaid carer's leave and unpaid compassionate leave, and to 10 days of paid family and domestic violence leave each year. Long service leave entitlements may also apply depending on your state or territory's legislation.

Termination notice

Generally, you don't need to provide a minimum notice period when terminating a casual employee, and they aren't obligated to give notice when resigning. However, exceptions exist within some awards, enterprise agreements, or individual employment contracts. It's crucial to be aware of any specific requirements that apply to your situation.

Casual conversion

Since 26 August 2024, casual conversion works through the employee choice pathway. A casual employee who has worked for you for at least 6 months (12 months with a small business employer) and believes they no longer meet the Fair Work Act definition of a casual can notify you in writing that they want to become full-time or part-time. You must consult them and reply in writing within 21 days, and you can refuse only on the grounds set out in the Act. Employers no longer have to offer conversion, but you must give casual employees the Casual Employment Information Statement when they start, after 6 months, after 12 months and every 12 months after that (small business employers: when they start and after 12 months).

Legal considerations for casual loading

Understanding the legal framework surrounding casual employment is important for businesses to remain compliant. Here's a breakdown of the key legislation and considerations:

Fair Work Act and National Employment Standards

The Fair Work Act 2009 is the primary piece of legislation governing employment relationships in Australia. It includes the National Employment Standards (NES), which set out 12 minimum standards for employees, including casuals. Some of these relevant to casual employment include:

• Maximum weekly hours of work
• The right to request flexible working arrangements
• Unpaid parental leave and compassionate leave
• Casual employment, including the employee choice pathway to permanent employment

Relevant Modern Awards

Modern awards are industry or occupation-based minimum employment standards that supplement the NES. They can include specific provisions related to casual employment, such as:

• Casual loading rates
• Minimum engagement periods
• Penalty rates and overtime
• Allowances

Employment law is subject to change, so staying informed is key for your business to remain compliant. Employment Compass provides resources and updates on casual employment legislation. Subscribing to our updates, seeking professional advice or booking an HR compliance audit can help you remain compliant.

If you need trustworthy advice about wages and pay, call our 24/7 HR advice line on 1300 144 002 for free initial advice.

Frequently asked questions

What is casual loading in Australia?

Casual loading is an extra payment added to the hourly wage of casual employees in Australia. It compensates for the lack of benefits like paid leave and job security that permanent employees receive.

How much is casual loading in Australia?

The standard casual loading rate in Australia is 25% of the base hourly rate. However, it's important to consult the applicable award or enterprise agreement as the specific percentage can vary depending on the industry and role.

How much is casual loading in NSW?

In New South Wales (NSW), the casual loading rate is typically 25% of the base hourly rate. This means a casual employee earns 125% of the equivalent permanent employee's hourly wage. However, always check the relevant award or enterprise agreement as the percentage can vary.

How does casual loading work?

Casual loading works by adding a percentage on top of the base hourly rate for casual employees. This extra payment compensates them for not receiving benefits like annual leave, sick leave, and redundancy pay. It provides a financial incentive for employees to accept casual work arrangements.

How is casual loading calculated?

To calculate casual loading, multiply the base hourly rate by the casual loading percentage. For example, if the base rate is $20 and the casual loading is 25%, the casual loading amount would be $5 per hour ($20 x 0.25 = $5).

What does casual loading compensate for?

Casual loading compensates for the lack of entitlements that permanent employees receive, such as paid annual leave, paid sick leave, notice of termination and redundancy pay.

How is casual loading calculated on overtime?

The calculation of casual loading on overtime can be complex and depends on the specific award or enterprise agreement. Generally, casual loading is calculated on the base hourly rate for overtime, not on the overtime rate itself. However, some awards might have different rules. It's best to consult the relevant award or seek advice from an HR expert to ensure accurate calculation.

When is casual loading paid?

Casual loading is typically included in each paycheck a casual employee receives. It's not a separate payment but rather an integral part of their regular earnings.

When does casual loading apply?

Casual loading applies to employees classified as casual workers. These are employees whose employment has no firm advance commitment to continuing and indefinite work, and who are paid a casual loading or casual rate. A regular pattern of hours does not on its own make someone permanent.

‍How do I add casual loading in Xero?

In Xero accounting software, you can add casual loading by setting up a new earnings rate specifically for casual employees. This rate should include the base hourly rate plus the casual loading percentage. Xero's help documentation provides detailed instructions on setting up earnings rates for casual employees.