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In a 2-1 split, the majority of the Fair Work Commission Full Bench held that employers will have to count periods of regular and systematic casual employment before workers became permanent, when calculating redundancy payments.

Earlier this year, Commissioner Riordan ruled that employers should not count prior continuous service as a casual when determining notice and redundancy payments for employees who had moved from casual to permanent employment. He found that this was the correct approach under the relevant clauses of the Enterprise Agreement applying to the employees in that the 25% loading these workers received when they were casuals compensated them for redundancy entitlements.

On appeal however, Senior Deputy President Drake and Deputy President Lawrence found the agreement, which incorporated provisions of the National Employment Standards (NES) specifies that redundancy pay is calculated according to periods of continuous employment which, under s22 of the Fair Work Act, "includes a period of regular and systematic casual employment". 

The majority said that "Industrial justice" might suggest 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".  The majority also agreed that there could not be any break between the periods of casual and permanent employment.  Separate earlier periods of employment could not be incuded

"However, the Act does not exclude a period of regular and systematic casual employment from the definition of service or continuous service for the purpose of severance payments, and neither does the agreement exclude that period of employment," Senior Deputy President Drake and Deputy President Lawrence said.

In a dissenting judgment, Commissioner Cambridge said the majority had adopted an "erroneous approach to the interpretation of s22 which is reliant upon the absence of particular words within that section".

Commissioner Cambridge went on to say that the meaning of "service" has significant implications for a number of minimum standards under the National Employment Standards beyond the redundancy provisions.

He warned that if "service" is "given a meaning that encompasses a period of casual employment prior to permanent employment being established", it could affect entitlements such as annual leave under s87 and paid personal/carer's leave under s96 which are fixed for "each year of service".

Employers should take note of Commissioner Cambridge’s warning that the "practical effect" of this construction is that service-related benefits that are "unambiguously not available" to a casual employee may become "retrospectively bestowed on a permanent employee for a period which would have not provided any entitlement for that benefit".

[AMWU v Donau Pty Ltd [2016] FWCFB 3075 (15 August 2016)]

Conclusion

The above decision does not apply to the termination of casual employees. It only applies to permanent employees who previously transitioned from regular and systematic casual employment to permanent employment before being made redundant. Section 123 of the Fair Work Act says that redundancy provisions do not apply to casual employees.

The question of whether service as a casual will count towards calculating accrued annual leave and personal/carers leave is yet to be determined. Periods of casual employment count towards calculating long service leave in NSW.  

Disclaimer: The above summary is not legal advice. Employers should contact Gordon Jervis at NECA on (02)9744 1099, or email Gordon.jervis@neca.asn.au  for more information