The 25 per cent casual loading looks like a premium, and owners routinely assume casuals cost more per hour than permanents. Run the full maths and the picture is more even than it looks, because the permanent’s lower headline rate carries a stack of costs the casual’s does not: paid annual leave, personal leave, public holidays, and the on-costs that accrue on all of them. The honest comparison is not headline rate versus loaded rate; it is the true, all-in cost per productive hour of each. This guide sets out how to convert both to a real hourly cost with a full worked example, what the comparison actually shows, and why the right answer is usually about flexibility and risk, not just the number.
Published: July 2026
A casual is paid their base rate plus a casual loading (commonly 25 per cent) in lieu of the entitlements permanents receive. That loading is visible and feels like a surcharge. What is not visible in a permanent’s headline rate is everything the loading is compensating for. Fair Work also covers casual conversion rights that can force a cost structure change mid-engagement.
A permanent employee is paid their base rate, but the business also funds paid annual leave (typically 4 weeks a year, during which the employee is paid but not producing), paid personal/carer’s leave (typically around 10 days a year), paid public holidays they do not work, and superannuation, payroll tax and workers compensation that accrue on all of those paid-but-not-worked hours as well as on worked hours. Super on ordinary time earnings follows ATO ordinary time earnings rules. The permanent’s true cost per hour actually worked is therefore materially higher than their headline rate.
Related guides and tools: casual conversion Australia, human resources services, full on-cost breakdown, contractor vs employee cost calculator.
Assumptions for a like-for-like role (illustrative; adjust rates and on-cost percentages to your state and scheme):
Permanent annual cash wages at $35 × 1,976 = $69,160
On-costs: super 12% = $8,299; workers comp 1.5% = $1,037; total on-costs ≈ $9,336
Total annual employment cost ≈ $78,496
True cost per productive hour: $78,496 ÷ 1,672 ≈ $46.95 per productive hour
Casual, same productive hours (1,672 hours worked in the year):
Wages: 1,672 × $43.75 = $73,150
Super 12% = $8,778; workers comp 1.5% = $1,097; total on-costs ≈ $9,875
Total annual cost ≈ $83,025
True cost per productive hour: $83,025 ÷ 1,672 ≈ $49.66 per productive hour
Gap: casual is about $2.71 per productive hour more expensive in this setup (about 6 per cent), not 25 per cent more. If personal leave usage is lower than modelled, or if payroll tax applies to both, the gap narrows or widens. If the permanent receives leave loading on annual leave, permanent cost rises and the gap shrinks further.
Interpretation. The 25 per cent loading is not a 25 per cent true-cost premium. Once leave and on-costs are counted, the decision is usually about flexibility, continuity and misclassification risk, not a dramatic hourly saving either way.
The permanent’s true hourly cost. Start with the annual base salary or annualised hourly wages for paid hours. Add superannuation, payroll tax (if over threshold) and workers compensation. Then divide not by paid hours but by productive hours, the hours actually worked after removing annual leave, personal leave and public holidays. Because the numerator includes on-costs and the denominator excludes non-worked paid time, the true cost per productive hour rises well above the headline hourly rate, often by 30 per cent or more once leave and on-costs are counted.
The casual’s true hourly cost. Start with the base rate plus casual loading. Add superannuation, payroll tax and workers compensation on worked hours. Divide by hours worked (all of which are productive, since casuals are generally not paid for leave).
Comparing the two on this like-for-like basis is the only fair comparison.
Once the true costs are close, the decision stops being about cost per hour and becomes about flexibility, continuity and risk.
Casuals buy flexibility, no obligation to provide ongoing hours, easy scaling up and down with demand, at the cost of continuity and with specific legal obligations around casual conversion and the definition of casual employment, which have tightened and carry misclassification risk if a “casual” is really working like a permanent.
Permanents buy continuity, commitment and retention, and are often better for stable, predictable hours, at the cost of fixed leave and entitlement obligations and reduced flexibility to scale down.
A business rostering casuals for truly variable demand is using them correctly; a business keeping long-term, regular workers as casuals to “save money” is often neither saving money nor managing conversion and misclassification risk. Remediation of misclassified leave and entitlements can run to thousands per employee per year of service.
The casual-versus-permanent question sits at the join of workforce cost and compliance. On cost, staffing decisions made on headline rates misjudge the actual labour bill and margin. On compliance, casual employment carries specific and tightening obligations. Running the true-cost comparison correctly, and pairing it with correct classification and conversion management, is management-accounting plus payroll-compliance discipline. Finance and HR coordination: finance services and human resources services.
Hypothetical café: 10 front-of-house roles, currently 8 casual / 2 permanent part-time, planning a redesign to 5 casual / 5 permanent part-time for core shifts.
Using the earlier true-cost figures of about $46.95 permanent productive hour and $49.66 casual productive hour, on 800 productive hours a week total:
That saving only holds if the permanent hours are truly stable and productive. If permanents are rostered into quiet periods just to “use their hours”, productive-hour cost rises again. The converter is not a licence to over-staff; it is a way to price stable core hours correctly and keep casuals for genuine peaks.
Interpretation. Mix redesign is a margin project and a compliance project. Core stable hours as permanent often reduces both true hourly cost and casual conversion risk. Peak-only hours as casual preserves flexibility. The expensive middle is long-term regular casuals who are neither cheap nor low-risk.
Use casual when hours are irregular, demand is seasonal or event-driven, and there is no firm advance commitment to an ongoing pattern of work. Track hours and patterns so conversion triggers are visible early.
Use permanent (full-time or part-time) when the roster is predictable for months at a time and you want retention, training investment and simpler long-run planning. Budget leave cover explicitly.
Convert when a casual has been working regular and systematic hours and the legal and commercial case for ongoing employment is clear. Conversion can reduce misclassification risk; run the true-cost converter so the business is not surprised by leave liabilities. Guide: casual conversion Australia.
Expensive option: keep everyone casual “for flexibility” while rostering the same people the same shifts for two years. Practical option: permanent core, casual flex, conversion reviews on a calendar, true-cost comparison at each 1 July rate change.
The converter’s answer moves when assumptions move.
Payroll tax. Once the business is over the state threshold, both casual and permanent wages usually sit in the wage base. Adding payroll tax at, say, 4.85 per cent lifts both true hourly costs and often narrows percentage gaps. Model with the payroll tax threshold calculator.
Leave loading. If permanents receive 17.5 per cent leave loading on annual leave, permanent annual cost rises and the casual premium looks smaller.
Personal leave usage. Modelling 10 days is conservative for some teams and light for others. Use actual average sick leave where you have history.
Overtime and penalties. Casuals on penalty-heavy weekends can cost far more per productive hour than a permanent weekday core. The converter should be run on the actual roster pattern, not only on ordinary weekday hours.
For hire affordability alongside mix, use can I afford this hire and the true cost of hiring an employee in Australia.
Days 1 to 30. Run the true-cost converter on your main classification using current rates, super, payroll tax position and realistic leave usage. List casuals with regular, systematic hours.
Days 31 to 60. Redesign one roster area into permanent core plus casual peak. Cost the leave cover. Start conversion reviews where the legal and commercial case is clear.
Days 61 to 90. Re-run the converter after the redesign with actual hours. Diary a 1 July update when award rates move. Pair HR classification decisions with finance margin reporting so mix is managed as a cost and risk system, not as a hiring habit.
Do casuals really cost more than permanent employees?
Often less than the headline implies. The 25 per cent casual loading looks like a premium, but a permanent’s lower headline rate carries paid annual leave, personal leave, public holidays and on-costs on all of them. Compared on true cost per productive hour, the gap is frequently small.
What is the casual loading for?
It compensates casuals for the entitlements permanents receive but casuals do not, paid annual leave, personal leave, public holidays and notice/redundancy. Whether it over- or under-compensates is what a true-cost comparison reveals.
How do I calculate a permanent employee’s true hourly cost?
Take the annual base, add superannuation, payroll tax and workers compensation, then divide by productive hours (hours actually worked after removing annual leave, personal leave and public holidays).
How do I calculate a casual’s true hourly cost?
Take the base rate plus casual loading, add superannuation, payroll tax and workers compensation on worked hours, and divide by hours worked.
If the costs are similar, how do I choose?
On flexibility, continuity and risk. Casuals suit truly variable demand; permanents suit stable hours and buy continuity. Once true costs are close, these factors should decide.
What is the risk of keeping long-term workers as casuals?
Misclassification. A “casual” working regular, predictable, ongoing hours may not meet the legal definition of casual employment and may have casual-conversion rights, with remediation exposure for leave entitlements.
Is it cheaper to hire casuals to save on leave?
Not necessarily. Once true cost per productive hour is compared, the casual loading often roughly offsets the permanent’s leave and on-cost burden, so the “saving” can be illusory while conversion risks are real.
Why does workforce mix matter to the numbers?
Because staffing decisions made on headline rates misjudge the real labour bill and margin impact, and because casual employment carries tightening compliance obligations.
Should super be included in both sides of the comparison?
Yes. Super applies to ordinary time earnings for both casuals and permanents and is part of true employment cost.
How often should we re-run the converter?
When base rates change (including 1 July award updates), when on-cost rates change, or when you are redesigning rosters or converting casuals.
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We review and check this guide periodically. At the time of writing (July 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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