Casuals and redundancy pay

Posted on February 14th, 2017

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casuals redundancy payThe Full Bench of the Fair Work Commission recently dealt with a dispute about redundancy pay.  Put shortly, a number of permanent workers had been made redundant.  Their employment was governed by an Enterprise Agreement (EA).  Prior to becoming permanent employees, the workers had been engaged as casual workers on a systematic basis.  The question to be determined was whether the (lengthy) period of service as casual workers counted towards the period of notice they should have been given, and the amount of severance or redundancy pay to which they were entitled.

In a majority decision, the Full Bench said that the prior period of casual employment should be taken into account.  The majority recognised that both the Fair Work Act (FWA) and the EA had the effect that casual workers were not entitled to redundancy pay.  However these particular workers were permanent employees at the date of termination.  As the FWA did not explicitly exclude prior periods of casual employment from the calculation of “continuous service” for redundancy purposes, the majority said that the whole period of service should be taken into account.  They did so, recognising that it may be seen as unfair that a worker who received casual loading for at least part of the period of employment, would also have that period of employment count towards the calculation of redundancy pay.

Unless the decision is overturned, employers will need to be cautious about simply “converting” casual workers to permanent employees.  So long as they have continuous service, the whole of the period of employment may be relevant for the calculation of notice (or pay in lieu) or redundancy payments:  AMWU v Donau Pty Ltd [2016] FWCFB 3075.

Tony Cavanagh Director at Mullane & Lindsay Solicitors NewcastleTony Cavanagh is a Director at Mullane & Lindsay Solicitors and practises extensively in Commercial dispute resolution and litigation, and employment law. If you require any assistance in these areas please contact Tony Cavanagh or contact our Newcastle or Sydney office. 

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