Is casual service counted for redundancy and notice entitlements?

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Is casual service counted for redundancy and notice entitlements?

The National Employment Standards (NES) contained in the Fair Work Act 2009 (Cth) (FW Act) provide minimum entitlements to notice periods and redundancy pay based on an employee’s service.

According to the Act a period of service that period during which the worker is employed by the employer, excluding:

  • any period of unauthorised absence;
  • any period of unpaid leave or unpaid authorised absence (except community service leave or stand down).

Reference to recent case decision (AMWU v Donau Pty Ltd

[2016]), FWC considered whether a period of regular and systematic casual employment counted as service for the purposes of notice of termination and redundancy pay.

A number of permanent shipyard employees being retrenched had prior periods of service as casuals, worked on a regular basis, with no break between the casual and permanent course of employment. They’ve also 25% casual loading during the casual employment.

The question was whether to count this casual employment period with the period of permanent employment when calculating redundancy pay and notice entitlements. A casual employee does not have any entitlement to redundancy pay or notice.

The FWC noted that industrial justice might suggest it is unfair for an employee who has received a casual loading for a period of employment to have that period of employment also count towards the accrual of severance payments. However, the FWC noted that a period of service by a regular and systematic casual employee is not identified as one of the exclusions from a period of service or continuous service in the FW Act.

Hence, according to FWC, a period of continuous service as defined by the FW Act includes a period of regular and systematic casual employment.

Implications for employers

This ruling is highly contentious and likely to be appealed to a Court by employer groups. The Full Bench who issued the ruling was split 2-1. Some of the difficult consequences flowing from the decision were identified by Commissioner Cambridge in his dissenting decision.

Following this decision, what would be the status of a casual who becomes permanent and would instantly claim the paid leave accrual based on the actual commencement date as casual? Similarly the paid parental leave binds an employee to be a permanent employee for at least 12 months. How the situation would be calculated if the employee was casual and later on became permanent but the 12 months condition is not clear in the light of this decision.

2016-10-12T23:45:39+00:00 August 31st, 2016|Categories: Compliance, Legal|Tags: |0 Comments

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