The term “all-purpose rate” in relation to casual employment can cause confusion for employers attempting to work out the correct rate of pay. There may be different wording in different awards relating to casual loading, and that wording can result in different methods of calculating the wages for a casual employee. 

For example, one modern award may state that a casual employee is to receive a loading of 25%, which constitutes part of their all-purpose rate. But another modern award may merely refer to a casual employee receiving a loading of 25%. 

The above two definitions would result in different calculation methods. Where an award does not define “all-purpose rate”, this term is interpreted by industrial tribunals to mean that the casual loading is included in any calculation under the award that is based on the employee’s ordinary pay, including overtime and other penalty rates. 

However, in the absence of specific provisions to the contrary, the then Australian Industrial Relations Commission (now Fair Work Australia) determined in its Award Modernisation decision in 2008  that, as a general rule, where penalties apply, the penalties and the casual loading are both to be calculated separately on the employee’s ordinary hourly pay. 

The difference 

The difference in the wording means that the “all-purpose casual loading” compounds any calculation on it, whereas, in other cases, the calculation is the addition of two separate calculations. 

An employee who works 2 hours overtime, whose ordinary hourly rate is $25 per hour would be paid as follows: 

  • All-purpose casual loading: $25.00 + 25% = $31.25 per hour + overtime @ time-and-a-half (50%) $15.625 = $46.875 per hour. 
  • General rule: $25.00 per hour. Casual loading (25%) = $6.25 per hour. Overtime @ time-and-a-half (50%) of $25.00 = $12.50 per hour. Total hourly rate for overtime = $25.00 + $6.25 + $12.50 = $43.75 per hour. This equals a total of 175%, ie ordinary rate (100%) plus casual loading (25%) plus time-and-a-half (50%). 

 In this particular case, the use of the term “all-purpose rate” results in a difference of $3.125 per hour in the appropriate casual hourly rate.