10 November

In an unexpected and extraordinary decision by the Fair Work Commission this afternoon, members are advised there has been a significant shift in the method to calculate casual overtime rates of pay.

In summary, the effect of the decision requires the “compounding of the casual loading”. Previously the approach of industry, including the Fair Work Ombudsman was for loading to be applied “cumulatively”.

This means overtime will be calculated on the casual rate including loading.

New Method

Grade Five Casual Tradesman ordinary hours
Overtime two hours at 150%
Total

  

$25.31 plus casual loading 25% = $31.63
$31.63 * 150% x 2 hours = $94.89
= $94.89
Old Method

Grade Five Casual Tradesman ordinary hours
Overtime two hours at 150%

Total

  

$25.31 plus casual loading 25% = $31.63
$25.31 * 150% x 2 hours = $75.93
$6.32 casual loading x 2 hours = $12.64
= $88.57

This results in about a 7% increase in cost.

This decision and its full implications will need to be examined and further advice from MEA will be forth coming in the following days.

Read the decision here

MEA members are likely to see reports in the media about this decision triggering large backpay claims from casuals as far back as six years ago. The success of individual claims will depend on a number of circumstances that will need to be investigated.

MEA will provide further information next week once the full decision and its impacts are better understood.

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