Casual loading and overtime – Fair Work clears up paid overtime.
If you hire casuals, there is no doubt that you may have been confused over interpreting the wording of awards in order to figure out how to pay a casual who is entitled to both casual loading and an overtime rate.
Under most modern awards, casual employees are entitled to ‘casual loading’, which is an amount on top of the minimum hourly rate - often 25%. When these employees also work overtime, calculating what should be paid can be a nightmare. The Fair Work Commission has set out the way to pay overtime for these casuals under each award. In doing so, it split up the way awards deal with paying overtime to casuals into three different categories, namely awards where:
• Overtime penalty rates are payable in substitution for the casual loading
• The casual loading and overtime penalty rate are added separately to the minimum hourly rate (the cumulative approach)
• The overtime penalty rate is applied to an ordinary hourly rate consisting of the minimum hourly rate and the casual loading (the compounding approach).
Employers should check which category their award falls into and ensure they have been paying overtime to casual employees correctly to avoid any discrepancies that may result in a claim for underpayment.
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