Employment & Safety Update: Casual Service Recognition For Redundancy Pay And Dealing With Excessive Annual Leave

Redundancy pay to include periods of casual service

A recent Full Bench decision of FWC has held that the service of an ‘ongoing’ employee (i.e. full-time or part-time employee who does not have a specified term/task contract) can include a period of service when they were employed as a ‘regular and systematic’ casual employee. This will only occur where the employee transitions to ongoing employment where there is no ‘break’ in service.

Implications for employers

This decision is currently ‘good law’ until appealed (which we understand is currently being considered) and overturned.  Until being overturned the decision will retrospectively give employees additional service related entitlements such as redundancy pay, notice of termination and even potentially, annual leave and personal leave (the actual case did not deal with these issues but commentators are suggesting they are natural flow ons).

The decision does not:

  • apply where the employee was a ‘true casual’ (i.e. the employment was infrequent); or
  • give casual employees an entitlement to redundancy pay.

Practical steps

You should carefully consider the potential implications before making any decision to:

  • convert casual employees to an ongoing position. A ‘break’ in the service between the casual employment and commencement of the ongoing employment may be enough to prevent the service continuing; or
  • terminate an ongoing employee who had a period of continuous service as a regular and systematic casual employee.

Watch this space

There was a strong dissenting opinion which raised some valid practical issues with the majority’s decision (such as the prospect of ‘double dipping’ caused by employees receiving the casual loading but then getting the benefit of that service counted towards redundancy pay). There is a prospect that this decision will be overturned either by another Full Bench of FWC or the Federal Court.

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New clause on directing employees to take excessive annual leave

From the first pay period after 29 July 2016, a number of changes to modern award provisions for managing annual leave have taken effect. These changes will generally provide employers with a greater degree of flexibility to direct employees to take annual leave, although there are a number of important points to note.

What is the change?

An employee has an excessive accrual of leave where they have accrued more than eight weeks’ paid annual leave, or 10 weeks’ or more in the case of a shift worker.
Amendments to the majority of modern awards will allow an employer to:

  • direct employees to take annual leave if they have accrued an excessive amount;
  • grant their employees annual leave in advance; and
  • allow their employees to cash out up to 2 weeks annual leave per year where the agreement is in writing, as long as they have accrued an excess of 4 weeks annual leave.

The provisions will be the same in many awards, but there are some key differences in some industries. For example, some modern awards including the Aged Care Award 2010, Clerks – Private Sector Award 2010 and Social, Community, Home Care and Disability Services Industry Award 2010, now also allow employees after 29 July 2017 to dictate when they may take excess annual leave, even if the employer does not agree.

What does this mean for your business?

The changes will increase the capacity of many employers to manage excess annual leave balances. However, it also comes with a deadline: some employees will also now be able to dictate the timing of their annual leave where excessive balances have been accrued.

Employers should consider whether any of their employees are affected by these changes and adjust their annual leave policies and procedures as appropriate. If your employees may gain the right to unilaterally take excessive annual leave as of 29 July 2017, you should start taking steps to manage that excess leave balance over the course of the next 12 months.

If you have any queries or would like further information regarding this article, please contact:

David Dilger
Partner
M: 0428 238 819
E: ddilger@pageseager.com.au

Rod Collinson
Partner
M: 0430 221 067
E: rcollinson@pageseager.com.au

Luke Gattuso
Partner
M: 0411 989 292
E: lgattuso@pageseager.com.au

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