The full bench of the Fair Work Commission has found that casuals that convert to non-casual employment are entitled to notice and redundancy not only based on their permanent employment, but also their period of “regular and systematic” casual service:  AMWU v Donau [2016] FWCFB (Donau). 

The Commission took a broad view of “continuous service” resulting in more notice of dismissal and redundancy pay.

“Continuous Service”

Section 123 of the Fair Work Act (FWA) excludes casual employees from notice of dismissal and redundancy pay. Donau clarifies that the exclusion now only applies if the employee is a ‘casual employee’ at the time of termination.

If an employee has been employed as both a casual, and a permanent (part time or full time) then Donau says that “continuous service” in Section 22 of the FWA “includes any period of regular and systemic casual employment”

What does this mean?

This decision means that employers terminating permanent (that is, non-casual) employees will now need to account for the employees’ periods of “regular and systemic” casual service.

This decision is significant for employers:

• Casual employees already receive a high loading under most awards to compensate for not having notice and redundancy entitlements.
• Employers are less likely to convert employees from casual to permanent now that a notice and redundancy pay liabilities will accrue.
• Employers will not always be able to determine what is “regular and systemic” as the essence of casual employment is “without obligation”.
• Parties to business acquisitions will be faced with new liabilities when transferring employees.

What should you do?

Employers should:

• Account for the improved notice and redundancy entitlements of permanent staff that have prior periods of casual employment. 
• Check how their employment contracts and redundancy practices account for periods of casual service as some commentators think casuals that become permanents might try to claim annual leave, personal or carer's leave and notice of termination based on casual service.
• Seek legal advice before changing employee statuses from casual.
• On acquiring workers through a transfer of business, adjust the sale conditions and indemnities for redundancy payments for the increased liability.

This is a controversial decision that may be challenged. However, all employers should review their workplace practices and redundancy liabilities in response to these changes.  

Contact Peter McNamara to review your employment contracts to minimise your risks and liabilities.

Read the full case of AMWU v Donau [2016] FWCFB here:

https://www.fwc.gov.au/documents/decisionssigned/html/2016fwcfb3075.htm