Redundancy pay will not be counted for regular and systematic casual employees
20 April 2021
The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Bill) passed Parliament on 22 March 2021. The Bill includes changes to casual employment arrangements and will come into effect on 27 March 2021.
The Bill amends section 117 and section 119 of the Fair Work Act 2009 (Cth) to state:
‘A reference in this section to continuous service with the employer does not include periods of employment as a casual employee of the employer.’
As a result, when considering notice of termination and redundancy pay, periods of service as a casual employee will not be taken into account. This decision has changed the accepted interpretation of the meaning of ‘service’ within the Fair Work Act 2009 (Cth) (the Act), for the purposes of redundancy pay and notice of termination, to exclude initial periods of casual employment.
Across all states and territories, long-term casuals who have converted to permanent employment will no longer be entitled to redundancy pay and notice of termination for the entire period of service with their employer. Rather, only the period of permanent employment with the employer will count.
Why did this decision change?
In the 2016 case of AMWU v Donau Pty Ltd, the Fair Work Commission’s Senior Deputy President Drake and Deputy President Lawrence found that for the purposes of calculating redundancy payments, a permanent employee’s initial period of regular and systematic casual employment will count towards their period of continuous service. This was then reaffirmed in several other cases heard by the Fair Work Commission (FWO). In this case, the majority found that the company’s enterprise agreement specified that periods of redundancy pay should be calculated according to periods of continuous employment, which, under the Fair Work Act 2009 (Cth) would include a period of regular and systematic casual employment.
At the time, the decision was significant as it upset the longstanding belief that redundancy pay was not affected by an initial period of casual employment. However, the introduction of the Bill in early 2021 has once again turned the now accepted definition of ‘continuous service’ on its head.
The introduction of the Bill and its ramifications prevent casual double-dipping, by disallowing casual employees to be compensated the 25 per cent casual loading as well as claim their period of casual employment as service for the purpose of accrual of redundancy payments and notice. You can read more about the Bill, and the other changes it introduced in our article here.
Compliance is our strength, and we love helping others achieve it. With the resources available in enableHR, you’ll have everything you need to be 100% compliant when managing your people.
See enableHR in action today! Contact us to learn more about how we can help your business get compliance right – all the time.
A stronger economic recovery: 2021-22 budget