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Casual hours count towards redundancy pay

Redundancy

Australian employees will now have their casual employment calculated towards their redundancy entitlements as a result of a recent Fair Work Commission ruling.

The Fair Work Commission recently upheld an appeal made by the Australian Manufacturing Workers’ Union against a decision that allowed engineering and shipbuilding company Forgacs to only calculate the permanent employment period in their redundancy payouts.

According to McDonald Murholme Principal lawyer Andrew Jewell, this could potentially affect a large number of completed redundancies where prior service as a casual has not been counted.

“This full bench decision could result in a significant number of claims being brought by ex-employees or unions on their behalf,” he said.

“Employers will have to be careful with the record-keeping of casual employees and also maintain records for entitlements such as long service leave.

The full bench decision was based on the relevant enterprise agreement and their interpretation of the Fair Work Act 2009 (Cth) as various sections of the Act do not exclude regular casual employment in the calculation of severance payments.

“Furthermore, this may trigger an unintended consequence where employers become reluctant to convert casual employment to permanent employment,” Jewell said.

“Casual employees are not entitled to redundancy payouts and thus employers may be more inclined to keep them as casuals especially in industries where redundancies are common.”