Changes to Overtime Calculations for Casual Employees Effective from 23 November 2021
From 23 November 2021, employers will be required to apply the compounding approach when calculating the pay of their casual employees who work overtime. This means that the casual loading rate of 25% will apply to their ordinary hourly rate before the application of the relevant penalty rate. Therefore, the employer is required to pay time and a half, double time and double time and a half on the rate that is inclusive of the casual loading.
Overview of Casual Employees and Casual Loading
A casual employee is one that has no guaranteed hours of work, does not receive paid leave such as annual leave, personal/carer’s leave, and long service leave, works irregular hours and can be terminated without notice. In compensation for not receiving the same benefits as full-time and part-time employees, casual employees receive a casual loading.
Casual loading is an additional amount paid to a casual employee above the base rate of pay that is paid to permanent employees. Under the Electrical, Electronic and Communications Contracting Award 2020 (the Electrical Award), the casual loading amount is 25% above the base rate of pay.
Other Applicable Changes to the Electrical Award
| Wage rates (as % of the Ordinary Hourly Rate) | Scenarios for Casual Continuous Shift Workers | Scenarios for Casual Non-Continuous Shift Workers |
| 187.5% for the first 2 hours, 250% per hour thereafter | N/A |
|
| 187.5% (This substitutes the relevant penalty rate) |
|
|
| 250% |
|
|
| 312.5% | N/A |
|
Calculating Overtime Rates – Examples
Please see the following example on how to apply the compounding approach to a grade 5 licensed electrical worker:
A full-time/part-time grade 5 licensed electrical worker is entitled to $25.93 per hour. A casual employee is entitled to $25.93 plus a 25% loading, being $32.41. When that casual employee works overtime, they are entitled to (depending on when the overtime is worked):
- $48.61, which is time and a half of the casual employee’s rate of pay;
- $64.82, which is double time of the casual employee’s rate of pay; or
- $81.03, which is double time and a half.
Please note that this summary is only a guide and is not to be taken as legal advice.
Do contact us if you require any form of clarification, you can reach us at info@portal.businesssolutionshub.com.au or via our Contact Us page.
