Do directors and casuals count towards your employee headcount?

A “Small Business Employer” is defined in the Fair Work Act as an employer with fewer than 15 employees and is eligible for a number of concessions.

Once businesses are over 15 employees there are key changes relating to redundancies and unfair dismissal timelines (more details here).

One of the common questions we get asked is who is included in the 15-person count. Here's a quick overview.

Who is included:

• All permanent employees including full-time and part-time
• Employees of any related business. This includes organisations under the same parent company or under the same ownership.
• Depending on the specific scenario, the following may be included:
  
  • Business owners and directors
  • Some casual employees

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Is a business owner or director an employee?

The answer isn’t always straightforward. A business owner or director can be considered an employee, but it depends on how involved they are in the business and how they are paid. No single factor decides, the overall picture is taken into account.

Key considerations:

• If they’re paid a salary, they would typically be considered an employee.
• If they only receive business profits through discretionary payments or equity, they may not be.
• If the owner or director is actively involved in day-to-day operations or decision-making, they may be seen as acting in an employee-like capacity (even if they're paid through profits rather than a salary).
• Receiving employee-style business benefits, like a company car, may also make them more likely to be classified as an employee

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Does a casual employee count towards headcount?  

Casual employees are not included unless they are engaged on a regular and systematic basis. These terms are quite specific and are defined by the Fair Work Commission through certain criteria.

Key criteria and examples

• Frequency: An employee that works every week or couple of weeks, even on different days, is less likely to be considered casual.
• Pattern: An employee who works a consistent pattern of shifts, like the second Tuesday and Thursday of every month, is less likely to be considered casual.
• Rostering: An employee who is specifically rostered to work on certain days is less likely to be considered casual than employees who are offered work through a “casual pool” system.
• Tenure: An employee who has been with the business for a long time is less likely to be considered casual, even if their schedule changes over time.
• Nature of the work: Employees who are employed to perform ongoing tasks alongside permanent staff are less likely to be considered casual.

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Not sure where you land?

If you're close to 15, or you're not sure of your correct headcount, it's worth a quick chat with an HR Partner. We can help you work out whether the small business rules still apply, and what changes if they don't.

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