Casual Controversy Re-examined: Commission Questions Recognition of Casual Service for Redundancy Entitlements

In 2016, we reported on a surprising case of the Fair Work Commission which found that prior periods of regular and systematic casual service should be included when determining redundancy entitlements of permanent employees. A recent decision of the Fair Work Commission has departed from the 2016 case, providing useful guidance on how previous casual service should be treated when determining redundancy pay entitlements.

It has traditionally been understood that casual service should not count towards continuous services for redundancy pay purposes. This is because, amongst other things, casual employees are not entitled to redundancy pay and receive casual loading in recognition of the entitlements of permanent employees they do not receive.

The 2016 case of AMWU v Donau then came as a significant surprise and caused substantial concern to employers in that the Fair Work Commission concluded in the context of that case that prior casual service could in some circumstances be counted in an employee’s continuous service for redundancy pay purposes.

However, in a recent decision of the Full Bench of the Commission, in the matter of Unilever v AFMEU, the Full Bench distinguished the Donau decision and strongly emphasised that the earlier case turned on its own facts (in particular, the wording of the applicable enterprise agreement which in effect incorporated the definition of continuous service under section 22 of Fair Work Act for redundancy pay purposes). Instead, in Unilever, the Full Bench found that in the context of that case, the casual service did not count for redundancy pay purposes, stating that Donau ‘should not be understood as establishing any principle about the application of s22 of the Act to casual employment, or the approach to calculating service in enterprise agreements’.

As a consequence, employers can have greater confidence that when calculating redundancy pay, the traditional position that casual service should not be counted is the effective starting position. This will only be displaced if there are additional factors which modify this position (such as specific provisions in an enterprise agreement). Employers should seek further advice if clarification on the position under their specific enterprise agreement is required.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.