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UpdatesSep 03, 2018

Can previous casual work be included in redundancy payouts?

In AMWU v Donau (2016) the Fair Work Commission (FWC) reviewed the meaning of “continuous service” for the purposes of calculating redundancy pay and decided that periods of continuous casual employment, before a transition to permanent employment, with the same employer were to be counted.

By Lauren Drummond

In AMWU v Donau (2016) the Fair Work Commission (FWC) reviewed the meaning of “continuous service” for the purposes of calculating redundancy pay and decided that periods of continuous casual employment, before a transition to permanent employment, with the same employer were to be counted.

This was despite casual employees receiving a 25% pay loading during the casual employment period.

There was a concern following this ruling was that a period of regular and systematic casual employment as defined by the FW Act would include entitlements such as annual leave and personal/carer’s leave.

The FWC Full Bench sought to downplay the significance of Donau in Unilever Australia v AMWU (2018). The AMWU argued that permanent employees were to have their contiguous casual engagement or seasonal work calculated for the purpose of redundancy pay.

Even though there was an exclusion in the enterprise agreement that the provision did not apply to casual or seasonal employees, the AMWU said this exclusion only applied if they were engaged as casual or seasonal workers at the time of the redundancy, not for the purpose of calculating the redundant entitlement.

The Full Bench rejected this argument and interpreted the exclusion as preventing the entire redundancy agreement from applying to casual or seasonal employees, not just the payment provisions. The references in the agreement to a ‘year of service’ excluded a casual employee who had a collection of individual one-day periods of service.

The FWC in Unilever observed that the Donau decision “turned on its own facts” and did not establish any principle about the application of s 22 of the FW Act to casual employment. The concept of regular and systematic casual employment is a statutory construct used for specific purposes, such as calculating the minimum period of employment to qualify for access to the FW Act unfair dismissal scheme.

In the facts before the FWC in the Donau case, the National Employment Standards of the FW Act had been incorporated into the enterprise agreement. Therefore, it was relevant to consider s.22, which defines service for certain purposes in the Act. However, the Full Bench observed that s.22 does not define service for the purposes of enterprise agreements.

Lessons for employers

The Donau decision led many employers (and their advisers) to believe s 22 required that a permanent employee’s continuous service, for the purposes of calculating service-based entitlements such as annual leave, personal/carer’s leave and redundancy pay, required the inclusion of any contiguous period of previous regular and systematic casual employment.

This outcome appeared to conflict with the payment of a casual loading designed to compensate for the absence of those kinds of entitlements.

The Unilever decision has confined the significance of the Donau decision to the specific facts in that case and stands as a reminder to take care when seeking to extract general principles from the decisions of the FWC.

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