Redundancy pay to include casual hours, says FWC

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Redundancy pay to include casual hours, says FWC

In a controversial decision – differing from previous authority – a Fair Work Commission full bench decided by 2:1 that regular casual hours will now count towards redundancy pay entitlements.

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In a controversial decision – differing from previous authority – a Fair Work Commission full bench has decided by 2:1 that casual hours will now count towards redundancy pay entitlements.

The previously accepted interpretation of the relevant legislation was that casual hours did not count in assessing service accrued for redundancy pay entitlements.

The consequence is that employees who have regular ongoing employment – casual or permanent – will have all service counted for redundancy pay purposes.

In this case – AMWU v Donau Pty Ltd [2016] FWCFB 3075 (15 August 2016) – the majority on the bench upheld an appeal by the Australian Manufacturing Workers' Union – thus  requiring ship building company Forgacs to count the period of regular casual employment as well as permanent employment when calculating redundancy pay.

Majority


Senior deputy president Lea Drake and deputy president Jeff Lawrence considered the relevant agreement. They concluded that a period of regular and systematic casual employment – and an immediately subsequent period of permanent employment –  should be accumulated in assessing a period of service, noting this was the apparent intention in the relevant agreement.

Dissent


Dissenting, Commissioner Ian Cambridge considered the legislation did not support the majority interpretation.

The commissioner referred to the "proper characterisation of the concept of “service” in this context.

He considered this excluded casual work from service for the purpose of assessing redundancy pay – ie service-related benefits are "unambiguously not available" to a casual employee – and certain leave benefits, such as annual leave and personal leave.

He said: “The prospect that a casual employee who became a permanent would have her or his annual leave entitlement calculated from the date of commencement as a casual exposes the folly of the interpretation of the meaning of service in s22, to include any period of casual employment.”

Appeal


No announcement has been made yet, but an appeal would seem likely as this decision has considerable cost implications for employers.

A full case report will publish on WorkplaceInfo soon.

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