Five employment law cases that shook the world: #5 — Service as a casual counts for redundancy pay
As part of a series of articles we are examining five employment law cases that shook the world (or at least members of the Australian HR community).
Casual employees are entitled to a loading (or uplift) on the minimum wages paid to permanent employees (usually 25%). It is well understood that the higher wages payable to casual employees as a result of the loading are to compensate them for not receiving certain entitlements that are reserved for permanent (ie full-time or part-time) employees, eg entitlements to paid personal/carer’s leave, annual leave and redundancy pay.
Where – as sometimes happens – a casual employee is subsequently taken on by their employer as a permanent employee, a question arises as to whether or not their complete period of service (ie including the period of casual employment) should be taken into account when calculating an entitlement to redundancy pay under the Fair Work Act 2009.
There would be a certain logic in the position that a period of casual service should not be included in the calculations given that the employee will have already had the benefit of the casual loading. If the employee was entitled to the loading for this period and the period also counted towards an entitlement to redundancy pay, wouldn’t the employee, in effect, be double-dipping?
In AMWU v Donau Pty Ltd  FWCFB 3075 the Full Bench of the Fair Work Commission was required to determine this issue and – in a result that was surprising to many – determined that regular and systematic service whilst a casual employee does count when calculating redundancy entitlements if that employee subsequently becomes a permanent employee (and is then at some point made redundant).
Although the majority of the Full Bench acknowledged that “[i]ndustrial justice might suggest that 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” they found that they were constrained by the wording of the Fair Work Act 2009 (which contained no specific exclusion in respect of casual service).
For a fuller explanation of the law in this area please see our previous article here.