AMWU v Donau Pty Ltd [2016] FWCFB 3075: Redundancy Pay must now Reflect Employees' Previous Periods of Casual Employment
Thursday 25 August 2016 @ 9.44 a.m. | Industrial Law
In a recent Fair Work Commission ruling, Australian employers may now have to take casual work into account when calculating redundancy payments, making record keeping for business owners more important than ever before.
The Commission interpreted the Fair Work Act 2009 (Cth) (the Act) to take a broad view of "continuous service", and require certain previous casual employment to be taken into account when calculating redundancy pay.
Background
The decision in AMWU v Donau Pty Ltd [2016] FWCFB 3075 (15 August 2016) upheld an appeal by the Australian Manufacturers Workers’ Union (AMWU) in a dispute between employees and shipbuilder Forgacs around whether the company needed to take periods of casual work into account when calculating redundancy payments for staff.
Finding in favour of the union, the Commission ruled that workers who had started out as casual and then took up permanent work should have the full length of service considered in any subsequent redundancy payouts.
Interpretation of s 22 of the Act
For the purpose of defining "continuous service" under s 22 of the Act, the Commission determined that this phrase includes a period of "regular and systematic casual employment", partly on the basis that s 22 does not contain any words excluding such an interpretation.
As the one dissenting Commissioner put it, the danger is that a casual employment relationship based on one day of work per week for seven years might be considered "regular and systematic", with the entire seven-year period then being subsequently recognised.
Impact on future decisions
This decision means businesses will now have to consider periods of “regular and systematic” casual employment that occurred before an employee commenced full-time, permanent employment when calculating their final entitlements.
Trent Hancock, a senior associate at law firm McDonald Murholme, was quoted as saying:
“Regular and systematic does not necessarily work around a threshold of hours, but rather consistent hours over a period of time. It could be working two days a week over a consistent period. It could also make people reluctant to move workers from casual employment.”
Mr Hancock says it will now fall to business owners to keep proper records on whether their employees are working “regular” casual hours and how long they have been doing so because this information will affect final payouts should the employee be later employed on a permanent basis and then made redundant.
It is also important to keep rosters and other documents to keep track of what employees are entitled to.
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Sources:
Redundancy pay must now reflect employees' previous periods of casual employment
Casual hours take on new meaning for businesses when making staff redundant after Fair Work ruling – smartcompany.com.au
AMWU v Donau Pty Ltd [2016] FWCFB 3075 (15 August 2016)
