What Casual Labour Really Means for Your SME

Casual labour is getting more expensive, and employers are feeling the pinch.

Australian Bureau of Statistics (ABS) data shows Australian labour costs reached a record 111.7 index points in the first quarter of 2025, reflecting higher wages across the board, including casual staff.

For SMEs, that translates into real pressure. Sectors with heavy reliance on casuals, such as hospitality and retail, have seen some of the steepest rises.

Wages And Shortages Driving Costs Up

The Fair Work Commission’s 2024–25 review lifted minimum award rates from 1 July, with a major impact on businesses where many workers earn at or near award wage levels. On top of this, skills shortages in accommodation, food services, and retail mean casual roles remain hard to fill. With 21.3% of workers in these industries employed casually as of May 2025, competition for staff is adding to wage pressure.

Plus, the superannuation guarantee rate you must pay your staff rose to 12% from July. As well, psychosocial injuries – often suffered by casuals – are climbing, sending premiums higher, too. In NSW, for example, while those injuries only account for one in eight claims, they represent 38% of total compensation costs. Safe Work Australia data also reflects this.

Casuals cost more. Shifts are harder to fill. No surprises there.

Reducing Your Risks in Using Temporary Labour Hire and Gig Staff

Finding staff is tough. It’s not just small businesses doing this; government departments are leaning on temps in recent years.

Consider these risk reduction tips:

• Check worker classification carefully so you’re not exposed to penalties, back pay, and denied insurance claims
• Know who’s responsible in labour-hire arrangements, which is where your public liability and workers’ comp policies come in
• Clarify responsibility in contracts or policies for gear and tools the staff will use, including whose insurance covers loss, damage, or injury linked to that equipment
• Factor in safety training and onboarding even for short-term staffReview workplace security and access
• Keep records of shifts and roles, such as with accurate rosters, sign-ins, and task allocations
• Budget for the hidden costs of temps, such as higher turnover, training time, and insurance implications

Gig models seem flexible, but the insurance pitfalls are real.

Why Casual Hires Change Your Insurance Game

It doesn’t matter if they’re casual or part-time. If they’re hurt on the job, they’re covered, and they count as ‘workers.’ Call someone a contractor when they’re not? That can get expensive, fast.

Misclassifying casuals as contractors can result in denied claims or penalties. In short, a costly mistake.

Labour Hire Complicates Liability

If a labour hire worker gets hurt and you’re calling the shots, your business could be on the hook. Public liability? More casuals on site usually means higher risk. Make sure your cover matches your staff numbers.

For example, public liability policies need to account for how many casual or seasonal people are onsite at any one time.

Under-Trained Casuals Can Expose You

Not enough training? High turnover? That’s a liability, plain and simple, and one that insurers will price into your risk.

If casuals aren’t shown the ropes, or you’re swapping team members every week, mistakes happen. Suddenly, your insurance or workplace health and safety obligations become real costs.

There’s Help at Hand

We can clarify exactly how your cover applies to casuals, temps, and labour hire staff. Don’t wait until a claim exposes the gaps. A quick review now can ensure your workers’ compensation and liability policies reflect the real headcount on site, and that uninsured risks like high turnover or ad hoc training aren’t left hanging over your business.

The Takeaway?

Rising labour costs are hard to control, but the risks aren’t. With the right cover, clear worker classifications, and upfront safety checks, SMEs can keep staffing flexible without leaving the business exposed.

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