A flexible workforce model sizes a permanent core to the work you have in every week of the year, then covers the rest with casual and labour hire staff. The mix is not a ratio you can copy from another site, because it comes from your own weekly hours. This guide shows how to read them, for operations and HR managers in manufacturing, warehousing and logistics.
It sets no permanent vs casual staff ratio, because the right split depends on your data. The pros and cons of each engagement type are in the posts on labour hire versus permanent recruitment and permanent versus labour hire for trades, so they are not repeated here.
Find your base load: the hours you need every week of the year
Base load is the labour your site needs in even the quietest week. To find it, pull 12 months of weekly hours worked from payroll or rosters and plot them in date order. If you only have volume, the warehouse labour planning guide turns volume into hours.
Mark the weeks that were not normal, such as a shutdown or a week with a public holiday, so one odd week does not set the floor. Then read three layers off the chart:
- The floor. The lowest normal week. Work at this level never goes away.
- The predictable swing. The hours above the floor that rise and fall in a pattern you can see coming, such as month-end or a seasonal lift that repeats.
- The spike. The hours above the swing that arrive at short notice or only once or twice a year.
Here is an illustration, not a benchmark. If the lowest normal week is 380 hours, most busy weeks reach 520 and the worst week reaches 700, the floor is 380 hours, the swing is the next 140 and the spike is the final 180. Divide the floor by the productive hours one person works in a week to get your base load headcount. Add cover for leave before you settle the number.
Size the permanent core to the floor, not the average
Permanent staff suit work that never stops, so size the core to the floor. Staffing to the average means paying permanent wages in quiet weeks and still being short in busy ones.
Allow for absence when you turn floor hours into heads. According to business.gov.au's leave summary, full-time and part-time employees get 4 weeks of annual leave for every 12 months worked, and full-time employees get 10 days a year of paid sick or carer's leave. Casual employees get neither. A core sized exactly to the floor will be short whenever people are away, and the swing layer is where that cover comes from.
The same page says casuals can convert to permanent employment in some circumstances. The detailed rules sit with the Fair Work Ombudsman and the award or agreement that applies to your site, so check there before you rely on any of them.
Use casuals for predictable swing and labour hire for the spike
The swing is where casuals fit, because you can see it coming and build rosters around it. A returning pool of casuals suits a lift that repeats every month or every year. The legal tests for casual and fixed term engagement sit in the guide to fixed term vs casual vs labour hire for a single peak, so they are not covered here.
The spike is where labour hire fits, because the volume is hard to predict or short-lived and you do not want to carry people for it. The dollar cost of each layer is priced in the guide to labour cost per hour for blue collar roles, and the hire versus overtime cost comparison covers a seasonal peak.
Chandler Personnel runs Chandler Recruitment for permanent recruitment and Chandler Services for labour hire in Melbourne, so it can talk about both sides of the mix.
Decision rules for moving a flexible role into the core
A flexible role belongs in the core when the hours it covers are really part of the floor. Four rules help:
- It fills the floor. The role has been needed in every normal week of the 12 months, not only in busy ones.
- The same task keeps coming back. You keep inducting and retraining people for it, so continuity is worth more than flexibility.
- The knowledge is slow to build. The role needs a licence, ticket or site knowledge that takes weeks to replace.
- The need is not a one-off. It does not come from a project, a shutdown or a single contract.
The reverse rule is as useful: keep a role flexible when it exists only in the swing or the spike. Treat the move into the core as a planning decision first. The posts on seasonal to permanent transitions and converting contractors to permanent hires cover the people side.
Check your flexible workforce model each quarter with three numbers
The workforce planning page on business.gov.au says to review a workforce plan every 6 to 12 months and when the business changes, for example when you win a new contract or someone leaves. A quarterly look at the mix is a lighter check between those reviews. It uses three numbers:
- Floor gap. Floor hours minus the permanent hours paid for work, leave excluded, in the quarter's lowest normal week. A positive number means casuals or labour hire are filling the floor. A negative number means permanent staff were paid for work that was not there.
- Swing cover. Of the hours above the floor in a normal busy week, how many were worked by casuals, how many by overtime and how many by labour hire. If overtime or labour hire covers a swing you could see coming, plan casual capacity for it.
- Spike weeks. The number of weeks in the quarter when labour hire was used, and the hours it supplied. If labour hire appears in most weeks, it is no longer a spike and the layer below needs resizing.
Write the three numbers next to last quarter's. A number that moves in the same direction two quarters running is a signal to resize a layer, while a single move may be one odd week.
Related Resources
- business.gov.au pay, leave and entitlements
- Permanent recruitment
- Labour hire in Melbourne
- Labour hire versus permanent recruitment
- Permanent versus labour hire for trades
- Seasonal to permanent transitions
- Hire versus overtime cost comparison
Frequently Asked Questions
What percentage of my workforce should be casual or labour hire?
There is no single right percentage, because the split depends on how your weekly hours move. Work out the floor, the predictable swing and the spike from 12 months of weekly hours, then staff each layer to match. A site with a flat floor and a short spike needs a different mix from one with a steep seasonal lift, so treat any percentage quoted elsewhere as a question to test, not an answer.
What is a core and flexible workforce model?
It splits your labour into a permanent core sized to the work you have every week, and a flexible layer above it. The flexible layer is usually casual staff for swings you can predict and labour hire for short or unpredictable spikes. The aim is to avoid paying for idle permanent hours in quiet weeks and to avoid relying on overtime in busy ones.
When should I convert a casual or labour hire worker to permanent?
Use a planning rule: a role that fills the weekly floor belongs in the core. If the same role has been needed in every normal week of the last 12 months, the role belongs in the core even if it is filled by a casual or a labour hire worker. The conversion rules themselves sit with the Fair Work Ombudsman and the applicable award, so check them, and your agreement with the provider for a labour hire worker, before you make an offer.
How do I compare the cost of permanent, casual and labour hire fairly?
Use cost per productive hour for each layer: the full cost of the people in that layer divided by the hours they spend doing productive work. Include paid leave and non-productive time for permanent staff, and the provider's charge for labour hire. Compare the same period for each, and read the result layer by layer rather than looking for one winner.
How do I stop flexible staff becoming a permanent crutch?
Watch the floor gap each quarter. If casuals or labour hire cover the floor week after week, the flexible layer is doing permanent work. Either hire to the floor, or decide on purpose to keep that work flexible and write down why. Reviewing the mix on a set date each quarter stops it drifting.
Hire permanently for the floor, flex above it
A flexible workforce model is a sizing exercise, not a ratio. Permanent staff cover the floor, casuals cover the swing you can see coming, and labour hire covers the spike. This week, pull 12 months of weekly hours and mark the floor, the swing and the spike on one chart.
