Employment relationships can take several different forms, with each creating certain rights and obligations on the parties involved. In this document we provide an overview of each type and its definition.
Permanent
A permanent employee is employed on either a full-time or part-time ongoing basis. A full-time employee is employed to work at least 38 ordinary hours a week. In contrast to this, a part-time employee is employed to work ordinary hours of less than 38 hours a week. This may vary depending upon whether the relevant employee is covered by an industrial instrument.
Permanent employees are entitled to paid leave, redundancy pay and are required to be given notice of termination.
Sometimes a permanent employee is used to distinguish the employee from a fixed term, temporary or probationary employee, being types of employees that will not usually have an expectation of ongoing employment. More often, however, the term is used to distinguish the employee from casuals who are not entitled to paid leave entitlements, redundancy pay and notice of termination.
Casual
A casual employee is engaged for one or more discrete engagements without continuity of service between each engagement. Casual employees work for an employer on a demand-only basis. Unlike a permanent agreement, casual employees have no firm commitment in advance of ongoing employment and generally work on an ad hoc basis (so the work hours may be irregular).
A key feature distinguishing a casual employment relationship from a permanent employment relationship is the fact that casual employees are not entitled to paid leave, redundancy pay and are not required to be given notice of termination. However, exceptions apply (for example, some redundancy pay entitlements are granted to casuals under certain enterprise agreements and employer policies).
Despite a casual employee’s otherwise broken service, legislation will deem a casual employee’s service as continuous for the purpose of service-based entitlements such as long service leave (for example, s 62A of the Long Service Leave Act 1992 (Vic)), the qualifying periods for parental leave (s 67(2) FW Act) or the minimum employment period for access to unfair dismissal laws (Fair Work Act 2009 s.384(2)).
Casuals working regular shifts
A regular pattern of hours does not mean that there is a firm advance commitment to continuing and indefinite work. However, casual employees who have worked for their employer on a regular and systematic basis for 12 months need to be offered the option to convert to full-time or part-time (permanent) employment by their employer. Certain eligibility requirements need to be met for this to occur.
Please visit the Fair Work page: Employers offering casual conversion for information about the requirements and process for casual conversion.
Small business employers are not required to offer casual conversion to their casual employees. See Small business employers for more information and Employers offering casual conversion for the requirements and process.
Conversion to other forms of employment
Some modern awards give a casual employee the right to convert to permanent employment after a period of regular casual service (for example, under clause 14.4 of the Manufacturing and Associated Industries and Occupations Award 2010, a regular casual employee may elect to convert to permanent employment after six months of service).
Casuals and labour-hire arrangements
The term “casual” may be used to refer to an on-hired employee supplied to the workplace by a third-party contractor or labour hire agency. In fact, this employee may well be employed by the labour hire agency as a temporary employee, with the employee receiving all the entitlements of a full-time employee during the period of the assignment.
As the employer, the on-hire business is responsible for ensuring employees always receive their minimum employment entitlements.
Fixed Term
Fixed-term employees have an expectation of continued employment over a prescribed period. They work regular hours as outlined in their contract, which is generally equivalent to permanent part-time or full-time hours. As such, fixed-term employees are entitled to minimum conditions outlined in the National Employment Standards (NES).
Under a true fixed term contract both parties agree that employment will be for a specified period. Each party agrees that they will not seek to terminate employment during that period, or that they will only do so on certain specified grounds.
Employees employed under these kinds of contracts are regarded as being ‘employed for a specified period of time’ and are therefore exempt from NES entitlements to notice and redundancy pay.
However, the legal risk with such arrangements is that if employment is terminated earlier by the employer, it faces may face a claim for breach of employment contract if that termination was inconsistent with the right of early termination. The dismissal is also not exempt from Fair Work Act unfair dismissal laws.
Maximum term contracts
The term “fixed term contract” is sometimes given to a maximum term contract. A maximum term contract specifies a date upon which both parties agree employment will end. However, the maximum term contract also provides for an unrestricted right of either party to terminate employment earlier by giving a certain period of notice.
Whether the fixed term contract is a maximum term or a true fixed term contract when the employment ends on the expiration of the agreed term that termination will generally not be at the initiative of the employer. This means that termination of employment at the end of a fixed term will not be open to challenge under the Fair Work Act unfair dismissal provisions. Nor will the termination attract NES entitlements to notice, and redundancy pay.
An exception is if the employee has a reasonable expectation that the term of the contract will be extended or renewed (for example, because it has been renewed on several occasions in the past, or there is no operational rationale for the term such that the employment is, for all practical purposes, ongoing). In that situation, the failure by the employer to continue employment after the term expires might be considered termination at the initiative of the employer.
Labour Hire
A labour hire agency supplies or “on-hires” its employees to work at a workplace controlled by a client of the agency in return for a fee from that client. Typically, the on-hired employee will work for the client or “host employer” on an assignment for an agreed period of time. An assignment can range from a single day to several years.
If the host employer or the agency terminates the assignment, or the assignment comes to an end on its own terms, the on-hired employees employment by the agency ceases and the on-hired employee waits “on the books” of the agency to be reassigned to another host employer.
Generally, if the labour hire agency is a legitimate business, no legal relationship will arise between the on-hired employee and the host employer. As a result, the on-hired employee cannot claim from the host employer employment entitlements or make an unfair dismissal claim.
However, the host employer will still owe legal obligations to the on-hired employee. In particular:
- Workplace health and safety legislation requires the host employer to maintain the health and safety of all persons working in its workplace, including on-hired workers.
- If an on-hired worker makes a claim under the worker compensation insurance policy of its labour hired agency employer, in most States and Territories the insurer can claim from the host employer the costs of that claim if it arose out of a failure to take reasonable precautions to prevent the injury.
- The host employer may be vicariously liable for any actions taken by its directly employed workers against the on-hired worker which might constitute discrimination or sexual harassment.
Other type of employment
Other types of employment include seasonal work and piecework pay.
- Seasonal work is temporary work to meet an organisation’s needs during certain times of the year. This might include businesses that are only open during part of each year, such as ski resorts.
- Pieceworker employees are paid according to the number of units/items produced instead of how much time they spend working. For example: shearing sheep or picking fruit.
NES rely on modern awards to define a piece worker and set out rules relating to the payment of NES entitlements (based on ordinary hours of work) for a pieceworker. Award/agreement-free pieceworkers also have minimum pay entitlements (Part1-2, Division 4 of the Fair Work Regulations).
Secondment
A secondment is where an existing employee (secondee) is loaned or on-hired by an employer (original employer) to another employer (host employer) for a discrete period. The secondee will usually need to agree to the secondment, unless his/her original employment contract does not permit the secondment.
There are various options for a secondment, as set below:
- The original employment contract continues, and a set of agreed terms apply to the secondee during the secondment period. The original employer may recover the employment costs associated with the secondment from the host employer under a separate arrangement.
- The secondee is granted unpaid leave of absence from the original employer during which the secondee takes up temporary or fixed term employment with the host employer during the secondment.
- The secondee’s employment with the original employer ends immediately before the secondment commences, on the basis that secondee will have the right to return to the original employer in either their original role or a comparable role.
Secondments issues to consider include:
- flights and flight transfers to and from the airport (if to a different location);
- host employer’s expectations regarding the secondee’s areas of competence and work standards;
- original employer’s verification that the host employer has in place appropriate risk minimisation;
- arrangements in areas including workplace health and safety, sexual harassment, and discrimination;
- appropriate briefings for the secondee prior to the secondment;
- cross-cultural training, if appropriate, on international secondments;
- taxation advice if an international secondment;
- appropriate accommodation if different location;
- family arrangements for long-term assignments (schools, return flights);
- relocation expenses;
- travel insurance with reasonable medical and dental cover;
- living away from home allowance;
- use of work tools taken from original employer, and insurance cover;
- vaccinations, currency, and visa on international assignments;
- right of host employer to poach secondee; and
- obligation of original employer to consult with secondee about developments that may affect their right to return.
For more information, please visit the Fair Work website: Types of Employees, Periods of service as a casual employee.
Need to download as a PDF? Click “Print” from your internet browser and select to save this document as a PDF.
Updated February 2022
