HUMAN RESOURCES
15
Casual hours to count
towards redundancy pay In a decision at odds with established practice, a full bench of the Fair Work Commission (FWC) has found that casual service counts towards an employee’s redundancy pay where the employee converts from casual to permanent employment.
The decision comes from the Australian Manufacturing Working Union’s (AMWU) successful appeal of an earlier FWC decision in which service as a casual was not found to count towards the calculation of service for the purpose of severance pay. A majority of the full bench found that because neither the enterprise agreement nor section 22 of the Fair Work Act 2009 specifically stated that a period of regular and systematic casual service is excluded from the definition of ‘service’ or ‘continuous service’, casual service should be included for the purposes of severance payments.
Peculiar outcome for redundancy entitlements
The entitlement to redundancy in section 117 and 119 of the Fair Work Act is qualified according to an ‘employee’s period of continuous service’, however, section 123 excludes casual employees from the entitlement. The full bench acknowledged that casual employees’ service, however long or continuous, does not qualify them for redundancy if they are a casual at the point in time when their employment ceases, however, the service can be ‘converted’ retrospectively if they are permanent at the
time their employment ceases. AMMA manager of workplace relations Con Deftereos, considers this could give rise to peculiar outcomes. “For example, an employee employed as a casual for 100 weeks at the time of redundancy would not be entitled to redundancy. If the same employee then worked one week as a permanent employee, their casual service would be ‘converted’ and they would be entitled to redundancy based on service dating back to when they were originally hired as a casual,” Deftereos explains. “It would also provide for disproportionate outcomes between permanent employees. For example, Employee A employed as a permanent employee for 51 weeks at the time of redundancy would not be entitled to redundancy. “Another employee, Employee B is employed as a casual employee for the same 51 weeks and is paid 25 per cent more than Employee A in this period. If this employee then worked one week as a permanent they would be entitled to redundancy.” Implications for employers
Deftereos says AMMA does not endorse the approach taken by the majority full bench and is in discussion with other employer organisations regarding the decision. “In the interim, it is recommended that when drafting industrial instruments employers should consider whether any terms can or should be included to clearly state that service as a casual does not count for severance purposes,” he says. “Employers making redundancies impacting on employees with periods of casual service prior to being hired on an ongoing basis may also wish to seek advice from an experienced AMMA consultant.” RP
RESOURCEPEOPLE | SPRING 2016 | www.amma.org.au