Five employ­ment law cas­es that shook the world: #5 — Ser­vice as a casu­al counts for redun­dan­cy pay

As part of a series of arti­cles we are exam­in­ing five employ­ment law cas­es that shook the world (or at least mem­bers of the Aus­tralian HR community).

Casu­al employ­ees are enti­tled to a load­ing (or uplift) on the min­i­mum wages paid to per­ma­nent employ­ees (usu­al­ly 25%). It is well under­stood that the high­er wages payable to casu­al employ­ees as a result of the load­ing are to com­pen­sate them for not receiv­ing cer­tain enti­tle­ments that are reserved for per­ma­nent (ie full-time or part-time) employ­ees, eg enti­tle­ments to paid personal/​carer’s leave, annu­al leave and redun­dan­cy pay.

Where – as some­times hap­pens – a casu­al employ­ee is sub­se­quent­ly tak­en on by their employ­er as a per­ma­nent employ­ee, a ques­tion aris­es as to whether or not their com­plete peri­od of ser­vice (ie includ­ing the peri­od of casu­al employ­ment) should be tak­en into account when cal­cu­lat­ing an enti­tle­ment to redun­dan­cy pay under the Fair Work Act 2009.

There would be a cer­tain log­ic in the posi­tion that a peri­od of casu­al ser­vice should not be includ­ed in the cal­cu­la­tions giv­en that the employ­ee will have already had the ben­e­fit of the casu­al load­ing. If the employ­ee was enti­tled to the load­ing for this peri­od and the peri­od also count­ed towards an enti­tle­ment to redun­dan­cy pay, wouldn’t the employ­ee, in effect, be double-dipping?

In AMWU v Donau Pty Ltd [2016] FWCFB 3075 the Full Bench of the Fair Work Com­mis­sion was required to deter­mine this issue and – in a result that was sur­pris­ing to many – deter­mined that reg­u­lar and sys­tem­at­ic ser­vice whilst a casu­al employ­ee does count when cal­cu­lat­ing redun­dan­cy enti­tle­ments if that employ­ee sub­se­quent­ly becomes a per­ma­nent employ­ee (and is then at some point made redundant).

Although the major­i­ty of the Full Bench acknowl­edged that “[i]ndus­tri­al jus­tice might sug­gest that 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” they found that they were con­strained by the word­ing of the Fair Work Act 2009 (which con­tained no spe­cif­ic exclu­sion in respect of casu­al service).

For a fuller expla­na­tion of the law in this area please see our pre­vi­ous arti­cle here.