A recent Fair Work Commission ruling means Australian employers may now have to take casual work into account when calculating redundancy payments, making record keeping for business owners more important than ever before.
The decision upheld an appeal by the Australian Manufacturers Workers’ Union in a dispute between employees and shipbuilder Forgacs around whether the company needed to take periods of casual work into account when calculating redundancy payments for staff.
Finding in favour of the union, the Commission ruled that workers who had started out as casual and then took up permanent work should have the full length of service considered in any subsequent redundancy payouts.
Trent Hancock, senior associate at law firm McDonald Murholme, told SmartCompany the decision means businesses will now have to consider periods of “regular and systematic” casual employment that occurred before an employee commenced full-time, permanent employment when calculating their final entitlements.
“Regular and systematic does not necessarily work around a threshold of hours, but rather consistent hours over a period of time,” says Hancock.
“It could be working two days a week over a consistent period.”
There is a chance that the decision could have an effect on redundancies already made, according to McDonald Murholme principle Lawyer Andrew Jewell.
Jewell told SmartCompany the ruling “could result in a significant number of claims being brought by ex-employees or unions on their behalf”.
“It could also make people reluctant to move workers from casual employment,” says Hancock.
Hancock says it will now fall to business owners to keep proper records on whether their employees are working “regular” casual hours and how long they have been doing so because this information will affect final payouts should the employee be later employed on a permanent basis and then made redundant.
“It’s important to keep rosters and other documents to keep track of what employees are entitled to,” he says.