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Employee Types: Understanding the Difference Between Permanent, Full-Time and Fixed-Term

Do you know the difference between a Full-Time and Permanent employee?

As a manager or business owner, it's essential to understand and correctly use employment terms. Often, these terms are misunderstood. 


For example, you might request a contract for a "Full-Time" worker, intending to hire someone permanently. This confusion can result in misaligned expectations, compliance risks, and other significant problems.


Let’s clarify these terms and help you make informed decisions.


Permanent vs. Other Employment Types: What’s the Difference?


Type of Employees:

  • Permanent Employee: Has ongoing employment with no set end date.

  • Fixed-Term Employee: Is hired for a specific period with a pre-determined end date.

  • Casual Employee: Casual employees work on an as-needed basis without guaranteed hours.  They do not work regular hours and there’s no expectation of ongoing work.


Other worker types:

  • Temporary Worker (Temp): Temporary employees are hired for short-term assignments, often through staffing agencies. These workers are generally employees of the contracting agency.

  • Contractor: A contractor is a self-employed individual or a company engaged for a specific task or project.



Other definitions:

  • Full-Time or Part-Time: Refers to the number of hours someone works.  Full time is generally 30 - 42 hours per week (depends on who you ask!). All of the above types of workers and employees could be part-time or full-time.


Example Scenarios:

  • Adrian has no set end date for their employment and works 37.5 hours each week. Adrian is a Permanent employee working Full-Time.

  • Jenny works 20 hours per week, supporting a project. Jenny is on a Fixed-Term contract working Part-Time hours.


Getting It Right

To ensure employees are placed on the correct contract, consider these questions:

  • Is the employment for a fixed term or ongoing?

    • Determine whether the employment is temporary with a defined end date or permanent with no end date.

  • What happens once they finish the project?

    • Will there be ongoing work?

  • How many hours per week will the employee work?

    • Clarify the weekly hours to distinguish between different employment types.

  • Will they be paid on your payroll, through invoice or an agency?

    • Determine which type of agreement is needed.

  • Are the hours guaranteed?

    • Understand if the hours are fixed or if there is flexibility, affecting the type of contract needed.



Resources for getting it right


Why It Matters

  • Legal Compliance: Incorrect terms can lead to referencing the wrong legislation, resulting in non-compliance with employment laws. This includes issues like incorrect leave entitlements, unfair dismissal claims, and other legal disputes, opening your organisation up to significant risks.

  • Employee Expectations: Verbal offers can sometimes misrepresent the role, leading candidates to expect different terms. Clear and accurate communication helps manage these expectations, ensuring that both parties are on the same page.

  • Employee Rights Education: As we encourage employees to become more educated about their rights, we must match this with our diligence. This not only fosters trust but also ensures transparency and fairness in the workplace.

  • Data Accuracy: Accurate classification is vital for reporting, budgeting, and measuring organisational metrics. Misclassifications can distort data, affecting everything from financial forecasting to workforce planning.


Common Mistakes

  • Confusing fixed-term with casual employment We have seen many cases where an employee is hired for a short period of time, and being labelled as “casual”, however, it is important to make sure that if they’re working regularly over that period, that they are in fact classified as fixed-term.  Classifying an employee as casual when they should be fixed-term creates significant risk and potential liability - e.g. you may have to pay their holiday pay twice, and back-pay for other entitlements!

  • Failing to provide an agreement No matter what kind of worker you’re engaging, an agreement should be in place to ensure that all parties are clear about the nature of engagement.  By law, you must provide every employee (permanent, fixed-term, or casual) with an employment agreement.It is also best practice to ensure that an agreement is in place for other types of workers.  This will safeguard your business from significant risks, and ensure alignment with understanding the nature of the relationship.

  • Failing to clarify what the employment type is on the employment agreement If nothing is stated, the assumption is that it is permanent employment.  This can cause some major issues later if in fact the intent was to be fixed-term or casual!


For managers and business owners, precision in employment terminology is essential. By understanding and correctly applying the terms correctly, you can avoid misunderstandings, ensure legal compliance, and foster a more transparent and fair workplace. 


Stay informed and follow us for more helpful information to improve your knowledge and business practices.



 

This post was written by Sarah, one of our Senior People Ninjas! Sarah has worked in a wide variety of roles across many organisations and industries, giving her a breadth of experience. Sarah specialises in process improvement and efficient ways of working.


At People Ninjas, we believe in employing people with diverse experiences and knowledge so we can best help you with your unique needs. To find out how we can help you, click here to contact our team for a free consultation.


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Duncann Evans
5 days ago

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