FWC casual redundancy pay order flawed: ARTIO

By: Anjali Behl

Ryan says full bench decision contradicts nature of contract, definition of ‘casual’ work

FWC casual redundancy pay order flawed: ARTIO
ARTIO national industrial advisor Paul Ryan says the Fair Work Act excludes casual work from redundancy entitlements.


recent order by the Fair Work Commission (FWC) related to obligations for companies employing casual workers may not impact on the industry but it does serve as a warning on contracts and bargaining agreements, according to the Australian Road Transport Industrial Organisation (ARTIO).

The case, Australian Manufacturing Workers' Union (AMWU) v Donau Pty Ltd, revolved around whether the period of initial regular and systematic casual employment by an individual before being employed as a permanent worker entitled them to redundancy claims.

While the initial order by Commissioner Bernie Riordan ruled that initial casual service cannot contribute towards permanent service entitlements, the full bench overturned the order with two votes to one.

Senior deputy president Lea Drake and deputy president Jeff Lawrence stated that employees can accrue entitlements from initial casual work, with Commissioner Ian Cambridge dissenting and backing the previous ruling.

The commission found that a period of service by a regular and systematic casual employee is not identified as one of the exclusions from a period of service or continuous service in the Fair Work Act 2009 – a point counter-argued by the ARTIO.

ARTIO national industrial advisor Paul Ryan says the threat of a similar occurrence in the transport sector is remote given the way the provision is defined in the Act, however, he points out that operators must be mindful when shaping their contracts.

The ARTIO disagrees with the full bench decision on the grounds that the Act excludes casual work from entitlements including severance pay and notice of termination.

"ARTIO notes that s. 123 (1) (c) of the Fair Work Act 2009 specifically excludes casuals from an entitlement to notice around termination and severance payments," Ryan says.

"It does not differentiate between casuals who work occasionally and those who might work on a ‘regular and systematic’ basis.

"Quite obviously, the legislature’s intention is clearly to exclude casuals from such entitlements and this is in accord with over 100 years of accepted ‘custom and practice’ in the industrial relations field.

"The Donau decision retrospectively converts ‘casual’ work, if done on a regular and systematic basis’, to permanent work, thereby retrospectively altering the nature of the employment contract and counting such service for the purposes of determining entitlements which until the casual employee became permanent did not exist.

"ARTIO considers the majority decision as being wrong and prefers the analysis of commissioner Cambridge, the dissenting member of the FWC."

Ryan believes the decision will not hold in its existing state and will be reviewed during further court hearings.

ARTIO does not rule out the possibility of government intervention in the matter either.  

"This decision is wrong and ARTIO considers that it will be the subject of further court proceedings or the Turnbull government needs to legislate to re-enforce what the Act, in our view, currently provides."

However, given FWC’s recent order, Ryan suggests that all future enterprise bargaining agreements (EBA) must clearly state the period of casual work cannot be accrued towards future permanent term.

"It would be prudent in any EBA negotiations to ensure that the particular industrial instrument is quite specific around this issue – casual service cannot be converted to permanent continuous service."

ARTIO plans to issue a statement in this regard to explain the issue to industry members.

"The Donau decision will not impact the road transport industry, although it will ensure that any casual will be given a holiday, before being made permanent and ARTIO will put out an industrial circular, through its branch network, to explain this to its members," Ryan says.

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