Australia: Do you include the time that an employee worked as a casual, when calculating redundancy pay?

Casuals don't get redundancy pay, do they?

Traditionally, no. Section 123 of the Fair Work Act says that the redundancy pay provisions of the Act don't apply to casual employees. That is logical, as the concept of casual employment is a series of stand-alone, finite, engagements; with no ongoing obligation on the employer to provide work and no expectation of ongoing work.

What about a permanent employee who started as a casual?

As a permanent employee, the employee has a right to redundancy pay under the Act but for what period of service? The amount of redundancy pay an employer is required to pay to an employee depends on that employee's period of "continuous service" with the employer. Does the period of casual service count as "continuous service"?

AMWU v Donau Pty Ltd (FWC Full Bench 15 August, 2016)

The Fair Work Commission (FWC) decided by majority 2-1, that service as a casual did have to be included in the calculation of the redundancy entitlements of a permanent employee who had a period of service as a casual before becoming permanent employee. Strictly speaking, this decision concerns the terms of an enterprise agreement but the logic based on the interpretation of "continuous service" in the Fair Work Act and the absence of any wording excluding service as a casual, applies more broadly.

Commissioner Cambridge dissented from the majority decision and argued strongly that the specific provision of section 123, that casuals are not eligible for redundancy pay, should override the general provisions about "continuous service."

What does this mean for employers?

As a result of this decision, prior service as a casual does need to be factored into the calculation of redundancy payments.

However, it is possible that decisions in the FWC's four yearly review, concerning casual conversion rights and other issues concerning casual employment may clarify or alter this position, so that is a development to be watched.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.