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Significant changes concerning casual employment were recently introduced to the Fair Work Act 2009 (Cth) (Act) as part of the Federal Government’s plan to assist with the impact of COVID-19 on the economy. The amendments were introduced under the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill (2021) (Bill) (see our earlier article).

One of the changes which may have escaped your attention was a change to the rules regarding how periods of service as a casual employee interacts with entitlements to redundancy pay and notice of termination if such an employee subsequently becomes engaged as a permanent (full-time or part-time) employee.

 

What are the changes?

Sections 117(4) and 119(3) of the Act (concerning notice of termination and redundancy payments respectively) have been amended as follows:

‘A reference in this section to continuous service with the employer does not include periods of employment as a casual employee of the employer.’

 

Prior to the above amendment of the Act, periods of casual service whilst working regular and systematic shifts, were taken into consideration when calculating their redundancy and termination notice payments, if the employee later became a permanent employee.

The new amendment removes this right so that employees who worked regular and systematic shifts as a casual employee will not have their period of service as a casual employee taken into account for the purposes of calculating their redundancy and termination notice payments if they later become a permanent employee.

In the event a casual who has converted to a permanent employee has their employment terminated, their period of service for the purpose of calculating notice or redundancy pay will not include their period of service as a casual. In other words, they will only receive notice entitlements and redundancy pay solely based on their period of service as a permanent employee.

 

Why were the amendments introduced?

The key reason for this amendment to the Act is to prevent ‘double-dipping’ by casual employees. Casual employees are generally paid a 25 per cent casual loading to compensate them for (amongst other things) not being entitled to redundancy pay or notice entitlements. The amendment ensures that casual employees who later become permanent employees are not entitled to redundancy pay or notice based on periods of time where they would have been entitled to a casual loading.

The amendments reverse the decision in the case of AMWU v Donau Pty Ltd [2016] FWCFB 3075, where the Fair Work Commission stated that a permanent employee’s initial period of regular and systematic employment as a casual employee is to be taken into consideration as part of their period of continuous service for the purpose of calculating a redundancy payment.

 

Need further help?

If you need further help on any of the matters raised in this article please contact EI Legal.

 

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional/legal advice. If you are unsure about how this information applies to your specific situation we recommend you contact EI Legal for advice.

 

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