Casual Case Full Bench to decide if casual service counts in redundancy calculations

On 15 August 2016, a Majority of a Full Bench of the Fair Work Commission (FWC) handed down a problematic decision in AMWU v Donau Pty Ltd [2016] FWCFB 3075. Ai Group represented Donau Pty Ltd in the initial proceedings before Commissioner Riordan and in the appeal before a Full Bench of the Commission.

The case concerned whether or not service as a casual employee counts for the purposes of determining redundancy pay entitlements in circumstances where the casual has converted to permanent employment.

For example, if an employee had five years of employment as a casual and then converted to full-time employment for one year, the issue in contention was whether redundancy entitlements are based on one year of service (as argued by Ai Group on behalf of Donau Pty Ltd) or six years of service (as argued by the Australian Manufacturing Workers Union).

The employees were covered under an enterprise agreement which included redundancy entitlements, so the provisions of the agreement were relevant as well as the provisions of the Fair Work Act 2009 (FW Act).

In the initial proceedings, Commissioner Riordan decided that service as a casual is not counted for the purposes of calculating redundancy pay. He determined that to do so would be inconsistent with the approach taken by the Australian Industrial Relations Commission in several relevant decisions relating to the Workplace Relations Act 1996 and would amount to ‘double dipping’, as the employees had received compensation for the absence of redundancy entitlements in the form of the 25 per cent casual loading.

In the appeal decision, two of the three members of the Full Bench (Senior Deputy President Drake and Deputy President Lawrence) decided to overturn Commissioner Riordan’s decision, even though they conceded in their decision that their interpretation may result in an unfair and unjust outcome.

In a strong dissenting decision, Commissioner Cambridge supported Commissioner Riordan’s original decision and highlighted the unfairness and impracticability of the Majority’s interpretation.

It can be seen that in the proceedings, two members of the Commission adopted one interpretation of the FW Act (i.e. Riordan C and Cambridge C), and two other members adopted the opposite interpretation (i.e. Drake SDP and Lawrence DP).

It is important to note that the decision of the Commission in the AMWU v Donau Pty Ltd case was made under the jurisdiction provided by the dispute settling clause in Donau Pty Ltd’s enterprise agreement and is not binding on any other employer.

It is also important to note that on 19 August 2016, on the final day of hearings in the 4 Yearly Review – Casual and Part-time Employment Case, a 5-member Full Bench of the FWC called for further submissions from any interested party on the issue of whether casual service is counted for the purposes of redundancy and notice of termination where an employee has converted from casual to permanent employment.

The Full Bench took this step because in the Casual and Part-time Employment Case, the unions are seeking an award clause which would expressly provide that service as a casual must be counted for the purposes of notice of termination and redundancy if an employee has been converted to permanent employment. Therefore, the same issue that was dealt with by the FWC in the AMWU v Donau Pty Ltd case is squarely before the Commission in the Casual and Part-time Employment Case.

The directions given by the 5-member Full Bench on 19 August 2016 (as recorded on transcript), in effect, are:

  • That Ai Group and parties who are supporting the view that service as a casual does not count for the purposes of redundancy and notice of termination are to file submissions within 2 weeks (i.e. by close of business on Friday 2 September); and
  • That opposing parties are to file submissions within a further two week period (i.e. by close of business on Friday 16 September).

At this stage it appears that the Full Bench will rely on the written submissions that are filed in accordance with the above directions, as it has not indicated that any further hearings will be scheduled.

Should you require any detailed advice on casual employment contracts, enterprise agreements, redundancy, FWC appeals, or any other workplace relations issues, Ai Group and Ai Group Workplace Lawyers’ team of professional workplace relations advisers and lawyers are available to assist you.

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Ai Group's Head of National Workplace Relations Policy, Stephen Smith is responsible for workplace relations policy development and advocacy. He regularly represents industry’s views to governments and opposition parties, and in numerous inquiries and major cases. He is Special Counsel for, and Chairman of the Board of, Ai Group Workplace Lawyers, a national law firm operated by Ai Group.

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