Two recent Federal court decisions (click here) and (click here) have found that in applying the NES termination payments must be made on the date of termination – and not:
- in next pay period - which is usual industrial practice;
- as per FWO website - which says within 7 days of termination; and
- as per the FWC standard settlement agreement (Deed) - which can usually allow payment within 7 – 21 days
- there is genuine confusion about when employers are required to pay certain entitlements to an employee following their termination, including payment in lieu of notice, accrued but untaken annual leave and redundancy pay. How are employers meant to know any different?
- Payroll would generally prefer to pay all termination payments on the next ‘pay run’.
Until legislative change occurs employers are going to have to adjust their practices or run the risks of underpayment claims.
- Ensure that Payroll has the capacity to make a payment prior to other areas agreeing to a termination date
- Train your payroll and management staff of this new obligation
- Take advice on settlement agreements to not unintentionally put your organisation into breach by agreeing to termination dates that can’t be met with payment terms
