TERMINATION PAYMENTS

Q/ One of our employees has given us notice and will be terminating at the end of the month. How soon do we have to pay out their worked hours and unused entitlements?

A/ The Fair Work Act does not specify when amounts due on termination should be paid to the employee. The Fair Work Ombudsman provides us with the following advice:

It should be paid to an employee on their last day of work or on the next scheduled pay day, unless an award, employment contract, enterprise agreement or other registered agreement says otherwise.

Example of an Award clause relating to final pay:

Manufacturing and Associated Industries and Occupations Award 2010
34.3 Payment of wages on termination of employment
On termination of employment, wages due to an employee must be paid on the day of termination or forwarded to the employee by post on the next working day.

Example of an Agreement clause relating to final pay:

THE 1300 STAINLESS PTY LTD AND CEPU – PLUMBING DIVISION (VIC) ENTERPRISE AGREEMENT 2011 – 2015
23.2 Payment on termination
(a) When notice is given in accordance with clause 21 – Termination of employment, monies due to the employee will be paid at the time of termination. Where this is not practicable they will be sent by registered post or, if the employee is normally paid by electronic funds transfer, transferred into the employee’s account within two working days and waiting time will be paid as follows:
i. Where the employee gives notice – time spent waiting beyond the two (2) working days will be paid at ordinary rates at eight (8) hours’ pay per day up to the time the employee receives his/her full entitlements; or
ii. Where the Enterprise gives notice – from termination up to the time of posting at the rate of eight hours double time ordinary time per day up to a maximum of one (1) week’s pay.

Note: For most employees, Long Service Leave conditions currently remain in accordance with the State rules. Many State LSL Acts also refer to the timing of final payments of unused LSL

Example of a Long Service Leave requirement:

South Australia Long Service Leave Act 1987
8-Payment in respect of long service leave
(4) A payment in lieu of long service leave made under this Act on the termination of a worker’s service-
(a) will be calculated at the worker’s ordinary weekly rate of pay applicable immediately before the termination; and
(b) must be made to the worker immediately on the termination or, if the worker has died, to the personal representative of the worker on request.