We all know the basic distinction that separates part-time and full-time workers – the number of hours worked in a given period. But from a legal, financial, employment, and payroll standpoint, it’s vital to understand the exact differences, so that every employee is paid correctly and so all the relevant payroll and HR processes are done right.

Let’s start with the full-time employee. Their work hours will typically be between 30 and 40 a week, across a shift pattern that is the same week-to-week, or is at least consistent in how it varies. They will normally have more responsibility and accountability and have greater workloads to deal with; as such, this is reflected in wider access to employee benefits such as dental plans, health insurance or healthcare, and retirement plans.

Part-time positions, on the other hand, tend to be more fluid. Their working week and/or working hours are shorter (in the United States, for example, the Affordable Care Act defines part-time working as less than 30 hours a week). They tend to have more flexible schedules, fewer responsibilities, and benefits are sometimes – although not always – relatively limited compared to full-time employees. Multiple part-time employees can be used to make up what is known as a full-time equivalent employee, where the full-time hours of one role are collectively fulfilled.

This guide explores the key facts payroll practitioners need to know around part-time vs full-time employment, and how to ensure they all get the best possible experience, regardless of employment status.

Where else do part-time vs full-time employees differ?

The differences listed above only scratch the surface of the differences between part-time and full-time employment, and many of the nuances directly affect payroll processes. Important areas to be abreast of include:

Scheduling

Part-timers’ working patterns will vary much more than those with full-time positions. They are more likely to work different patterns, early mornings, late nights and weekends, and they’re also more likely to swap shifts with other employees to cover absences, or take on overtime to earn extra money. This means their hours worked, rates of pay, and consequent deductions can vary greatly from one payroll cycle to the next, whereas full-time paychecks will comparably vary very little.

Types of pay

Many full-time employees are salaried on a per-month or per-year basis, whereas part-time employees normally work fewer hours at an hourly rate. This means that there is often far more work to do in calculating part-time employees’ pay and deductions correctly. For example, if an employee’s total hours worked fluctuate over the year, there may be consequences in the amount of tax and social security that needs to be deducted from each paycheck.

Overtime exemptions

Different countries have different rules and thresholds regarding what does and doesn’t count as overtime, and how it should be paid (explore our library of Country Payroll Guides for more information). For example, in the United States, full-time employees are considered exempt and don’t qualify for overtime pay. Part-time employees are eligible if they work more than 40 hours a week; earn less than $35,568 per year; are paid on an hourly basis; and don’t do any executive, professional or administrative work. Keeping track of different requirements and eligibility is essential, but can be highly complex, particularly for international organizations.

Additional employment

Part-time workers are far more likely to work multiple jobs to supplement their earnings. It’s important that payroll teams are aware of these scenarios, so local tax authorities can be kept up to date. This will ensure that they issue the correct tax information to payroll processors to make the right deductions around income tax, as employees will get taxed on their total earnings from all of their employments collectively. This can also be valid for certain social security thresholds or ceilings, which may be reached when considering two part-time jobs.

Employee benefits

There is considerable variation between different countries in terms of benefits packages for part-time jobs, such as leave entitlement, memberships and subscriptions, paid sick leave, and insurance coverage. For example, the United States does not have any federal laws mandating benefits for part-time employees, but many employers choose to do so voluntarily to aid their talent acquisition and employee experience. On the other hand, many other countries require part-time employees to get the same benefits as their full-time counterparts, including the United Kingdom, Australia and all European Union member states.

How to decide between full-time and part-time employees

As well as the payroll-specific challenges listed above, there are many other considerations to take into account when considering offering a full-time or part-time role. With regards to a particular position you have in mind, you should ask yourself – and other relevant stakeholders – the following questions:

• Will it be easy to combine many employees’ variable work schedules in ways that enable smooth business operations?
• Is the role and department resilient to high staff turnover rates?
• Is there a demand within the business to lower employee benefit costs?
• Is flexibility and lower working hours suitable for the role?
• Would the business benefit from building flexibility and scalability into the role?
• Does your payroll team have the capacity and expertise to handle more complex processes cycle-to-cycle?

If the answer to all or most of these questions is ‘yes’, then part-time employees may well be a good choice. If most answers were ‘no’, then the role is probably better suited to the regularity, cost consistency and employee loyalty of employees with full-time status.

Managing global part-time and full-time employees

Handling the payroll demands of part-time employees shouldn’t be a deterrent to hiring, and doesn’t have to be as complex as it might sound. CloudPay’s unified, global payroll system, for example, is ideal for handling all the complexities of every employee’s payroll, wherever they work and whatever their employment arrangements. Importantly, this will also take country-specific labor laws, and local laws and regulations into account to ensure full compliance throughout the workforce.

Furthermore, on-demand pay innovations like CloudPay NOW can make part-time employment a more attractive proposition to employers and employees alike. Enabling employees to autonomously access their accrued wages on-demand gives them greater flexibility. This approach also reduces the administrative load on the payroll team, as they no longer need to process wages in set cycles.