After a landmark decision by the Fair Work Commission, employers must include periods of any casual work when calculating the redundancy payments of a permanent employee. The FWC recently held that the words ‘regular and systematic employment’ in s 22 of the Fair Work Act includes ‘casual work done by any permanent employee’.
There are 2 criteria points that must be met:
- The employee must be a permanent worker at the time of employment termination.
- The employee must have continuously worked at the company since his/her time as a casual employee.
What are the implications on businesses?
Employers have a greater potential liability to employees they make redundant.
Another concern expressed throughout the case was that employers may be at risk of their staff effectively double-dipping on entitlements. Rates that make up for the lack of benefits that accrue for permanent employees are compensated as casuals.
Looking to the future – How to manage the change
This case may be appealed to the Federal Court, and the Federal Government may intervene due to the financial impact on businesses.
However, businesses and companies should exercise caution when terminating the employment contract of a permanent employee with continuous, regular and systematic service, and who had formerly been a casual worker. The best way to ensure minimum liability is to negotiate an enterprise agreement that expressly excludes casual service from a redundancy payout.
Despite this, it is important to remember that no agreement will be successful in excluding any NES entitlements. National Employment Standards will be valid despite any exclusions of casual work.