A Full Bench of the Fair Work Commission (FWC) has ruled that construction workers on the Ipswich motorway upgrade project were not entitled to redundancy pay under the National Employment Standards (NES) because they were casual employees.
The Full Bench confirmed that the general law meaning of a “casual employee” no longer applies and that a “casual employee” for the purposes of the NES and the Fair Work Act 2009 (Cth) (FW Act) is defined within the applicable modern award or enterprise agreement.
The employees were engaged by Telum Civil (Qld) Pty Limited (Telum). Their employment had ceased when the project they were working on was completed. The CFMEU made a claim for redundancy pay on behalf of the group of employees.
Section 123(1) of the NES provides that notice of termination and redundancy pay do not apply to casual employees and Telum refused to pay on this basis.
Each of the employees had been engaged under the Telum Civil (QLD) Pty Limited ABN 98 134 691482 Section 329 Union Greenfields Agreement Contract Labour Hire - Civil Works February 2009 (Agreement).
Clause 3.3 of the Agreement contained two categories of employees: “permanent employees” and “casual employees”. These categories were not defined. Under the Agreement, only “permanent employees” were entitled to be paid annual leave, personal leave and public holidays and to notice of termination or redundancy payments.
The employees were employed as casuals and were paid a 25% loading as per clause 3.3 of the Agreement. However, the employees worked the equivalent of full-time hours and had regular and consistent starting and finishing times.
At first instance, Commissioner Booth concluded that defining the employees as “casual” employees under the Agreement and paying them as such was insufficient to determine their actual employment status. It was held that this required an analysis of the Agreement and the Act in the context of common law principles.
Applying the common law interpretation, Commissioner Booth held that the employees in question would be entitled to redundancy pay, provided that they:
- had completed 12 months continuous service with Telum;
- had a regular pattern of hours or fulltime employment;
- had an on-going employment relationship;
- worked patterns that were chosen by the employer, as opposed to being free to accept or reject work; and
- were required to give notice prior to being absent or going on leave.
The consequence of this decision was that many of the employees, who had been employed as casuals and paid the casual loading under the Agreement, were entitled to redundancy pay because of the systematic nature of the work that they had performed on the project.
Decision on appeal
On appeal, the Full Bench overturned Commissioner Booth’s decision and rejected the application of common law principles. Instead it held that s123(1)(c) should have been construed in the context of the FW Act as a whole and with the purposive approach mandated by s15AA of the Acts Interpretation Act 1901 (Cth).
The Full Bench held that in the absence of a specific definition of a “casual” in the relevant provision of the FW Act, the correct approach was to look to the underlying industrial instrument, such as the applicable agreement or award. Most awards do define casual employment with the core criteria that the employee is “engaged’ as a casual and is paid as a casual loading. This was indeed the case with the employees employed by Telum pursuant to the Agreement.
The Full Bench went on to conclude that, contrary to the intention of the FW Act, the alternative approach would permit employees to effectively “double dip” on their entitlements, in that they would access both the casual loading and other entitlements available to permanent employees such as annual leave and redundancy pay.
Bottom line for employers
An employee who is properly employed as a casual under an industrial instrument is unlikely to be entitled to redundancy pay, or to other entitlements from which “casual employees” are excluded under the NES. It is therefore important to ensure that industrial instruments properly define casual employment as this will avoid an invitation to consider common law principles and possibly expand the scope of employees entitled to these statutory entitlements.