Regular and systematic casual employment not counted for redundancy pay

The Bill included 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) (FW Act) 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 considered. This decision has changed the accepted interpretation of the meaning of ‘service’ within the FW 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 Full Bench of the Fair Work Commission 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 (FWC). 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 FW Act was interpreted to 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 accepted definition of ‘continuous service’ on its head.

The Unilever v AMWU decision in 2018 saw the Full Bench of the FWC distinguish Donau and find that periods of casual service prior to conversion to permanent employment aren’t considered as service when calculating redundancy payments.

The different findings from these two Full Bench decisions caused significant confusion and the introduction of the Bill clarified this.

The Bill prevents 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.

About our author

Nick Tindley is a Partner at Citation Legal and the Executive Manager of HR Consulting and Advisory Services at Citation HR. Based in our Melbourne office, he has over 19 years’ experience in providing industrial relations and employment law advice, with particular expertise in the retail industry. In his role as Executive Manager, Nick supervises both the consulting and advisory teams at Citation HR and is responsible for managing a number of key client relationships.