A controversial Fair Work Commission (Commission) decision was handed down recently which answered the question: Does prior casual employment count towards a period of permanent employment? The answer to this legal question is especially important when calculating redundancy pay and National Employment Standard (NES) entitlements.

In the decision of AMWU v Donau Pty Ltd [2016] FWCFB 3075 (Donau Decision) the Full Bench ruled with a 2-1 split that a period of continuous service DOES include a period of regular and systematic casual employment.

Although, this decision is likely to be appealed the crux of the decision has far reaching applications and may affect personal/carers leave entitlements and to a much greater extent annual leave entitlements. With many workers starting as a regular and systematic casual employee the Donau Decision potentially circumnavigates the clear legislative intent that casual employees are not entitled to redundancy pay.

For the time being Employers will need to adjust their practices when it comes to hiring casual staff with the view that potentially the casual service may count for overall service if the employee is hired on a full time or part time employment contract. This may mean accruals of severance payments are much larger than originally anticipated.

The Donau Decision is probably only limited to the question of redundancy, however, the far reaching application that many Industry Groups are concerned about is the rationale behind the Donau Decision potentially including other entitlements such as annual leave. If this is enlivened, there may need to be a review of casual loading in general as there is an argument for “Double Dipping” by casual employees.

Overall, casual staff are still not entitled to a redundancy pay or notice, however, if a casual employee is converted to a full time or part time employee their service as a casual employee may count towards redundancy pay service and notice entitlements.

What Should Employers Do?

Employers should seek legal advice from Employment Lawyers to consider legal implications and minimising liability when changing the status of or converting employees. In a transfer of business, there may liabilities arising from redundancy payments and specific advice should be sought to consider the implications of:

  • Indemnities with respect to liabilities;
  • Sales conditions;
  • Transfer of business conditions;
  • Employment Contracts/New Employment Contracts;
  • Change of Employment Status employee entitlements.

For further information or for a consultation to discuss any potential legal issue please contact Jonathan Mamaril, Principal & Director on 07 3876 5111 or email jonathanm@nb-lawyers.com.au or go to our website www.lawyersforemployers.com.au

Written by
Jonathan Mamaril, Principal & Director,
NB Lawyers – Employment Lawyers
07 3876 5111
jonathanm@nb-lawyers.com.au

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