Casual loading explained: how to calculate the 25% loading

Casual loading is an additional amount — expressed as a percentage of the base hourly rate — paid to a casual employee for every ordinary hour they work. A casual employee is one engaged without a firm advance commitment to ongoing work, who is paid on an hour-by-hour basis rather than receiving a guaranteed number of hours each week.

Because casuals are not entitled to many of the paid benefits that permanent staff receive, the loading is the mechanism that compensates them for going without. It is built into their hourly rate, so a casual takes home more per hour than a permanent employee on the same classification — even though their total cost picture can look quite different across a full year.

The loading exists to offset the entitlements casual employees forgo compared with permanent staff. The main entitlements it compensates for include:

• Paid annual leave — casuals don’t accrue or take paid holidays.
• Paid personal/carer’s leave — casuals are unpaid when they’re sick or caring for family.
• Notice of termination — casual engagements can end without the notice periods permanents receive.
• Redundancy pay — casuals are generally not entitled to redundancy payments.
• Paid public holidays not worked — casuals are typically only paid for hours actually worked.

In exchange for the flexibility casual arrangements provide both parties, the loading delivers a higher hourly rate that recognises the absence of these protections. The Fair Work Ombudsman sets out how casual entitlements and loadings apply under the National Employment Standards and modern awards.

The standard casual loading under most modern awards — and for award-free casuals under the National Employment Standards — is 25%. Calculating it on ordinary hours is straightforward: multiply the base hourly rate by 1.25.

A word of caution: the loading shown above applies to ordinary hours. Penalty rates (such as weekend, evening, or public holiday rates) and overtime are calculated on top, and awards differ in how the loading interacts with them. Some awards calculate penalties on the base rate plus loading — effectively compounding — while others use combined rates or a different method entirely. Always check the exact wording of the award or enterprise agreement that applies. A pay rate builder lets you configure these rules once so the correct rate is applied to every shift automatically.

Note too that the 25% figure, while standard, isn’t universal. A handful of awards, enterprise agreements, or contracts specify a different loading, so confirm the rate that applies to your employee’s classification before you run pay.

Because casual loading is part of a casual’s ordinary wage rather than a separate reimbursement, it is treated the same as the rest of their pay. Superannuation is calculated on the casual’s total ordinary time earnings, which includes the 25% loading — so the superannuation guarantee applies to the loaded rate, not the base rate. Casual loading is also fully taxable income, so PAYG withholding applies to it in the normal way.

On the payslip, the loaded rate is generally shown as the casual’s hourly rate; awards don’t require the 25% to be broken out as a separate line, though some payroll systems display it for transparency. What matters for compliance is that the correct total rate is paid and recorded.

It’s tempting to assume casuals are always cheaper because you only pay for hours worked. But the 25% loading means each casual hour costs more, and part-time employees accrue leave at a lower effective hourly rate while offering more reliable availability and lower turnover.

Which option costs less depends on your specific mix of hours, leave usage, and roster stability. For roles with steady, predictable hours, part-time can work out cheaper once the loading is factored in; for genuinely variable demand, casuals retain a clear flexibility advantage. To model the real numbers for your business, use our casual vs part-time comparison template. For the rostering and scheduling trade-offs between the two models, see our guide on casual vs permanent rostering.

Under the National Employment Standards, eligible casual employees can become permanent through casual conversion. When a casual converts to part-time or full-time, the 25% loading stops applying because they then accrue paid leave and gain the other permanent entitlements the loading was compensating for.

Employers have specific obligations around offering conversion and responding to employee requests within set timeframes. Getting the transition right — including removing the loading from the employee’s rate at the correct point — is important for both compliance and accurate pay. Our step-by-step guide on how to handle casual conversion walks through the process and the rate changes involved.

These are the casual loading errors that most often create underpayment claims or quiet overpayments:

The common thread is manual rate setup. Automated award interpretation applies the correct base rate, casual loading, penalties, and overtime to each shift based on the applicable award — removing the manual calculations where these mistakes originate and giving you a clear audit trail if questions ever arise.