Redundancy pay – does service as a casual count?

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Redundancy pay – does service as a casual count?

When determining a redundancy payout for a full-time employee, should we also consider the period they were employed on a casual basis?

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When determining a redundancy payout for a full-time employee, should we also consider the period they were employed on a casual basis?

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Q Our company is making a number of positions redundant at the end of the year. The affected employees have been consulted on the process including the selection criteria for redundancy as well as investigating possible redeployment within the organisation.

The affected employees have subsequently received a breakdown of their termination payments, payble on 31 December. One employee has queried their redundancy pay. The employee commenced work as a casual employee and worked for about 12 months before converting to full-time employment. The employee has been employed full-time for about seven years.
 
The employee is claiming their redundancy pay should be based on eight years service. The company has not included service as a casual employee because the Fair Work Act (FWAct) states that a casual employee is not entitled to redundancy pay. As there was no interval between their casual employment and conversion to full-time employment, is the employee’s redundancy pay calculated on 8 years or 7 years continuous service?
 
A The first question is whether the initial employment was indeed casual employment. This will depend on the definition of a casual employee in the applicable modern award, enterprise agreement or contract of employment. If the employee was truly a casual employee (ie, called in as required with no expectation of continued employment), it is presumed service finishes at the end of each engagement and therefore service would not be continuous during their casual employment.
 
Based on that presumption, the redundancy pay entitlement under the NES would be calculated on seven years continuous service with the employer, that being 13 weeks pay at the employee’s base rate of pay. However, if the nature of the work during the first 12 months of service involved working a 38-hour week and working each week, it could be argued the employee was actually a full-time employee, rather than a casual employee.
 
If the employee was initially a casual employee, then only the period of employment that included full-time or part-time employment would count as service for the purpose of calculating redundancy pay under the National Employment Standards (NES). The FWAct (s123(1)(c)) also provides that a casual employee is excluded from an entitlement to redundancy pay.


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