By Victoria Andrikopoulos
Do you pay your employees within seven days following the termination of their employment? If you answered ‘no’ then you’re not alone. It’s common for employers to process final payments within the next payroll cycle to best suit the needs of the business.
While this may seem logical to you, the Fair Work Commission (FWC) doesn’t agree. Most modern awards provide that an employee is entitled to receive their termination payment within seven days of their termination taking effect.
Failure to adhere to award terms and conditions, including time limits regarding the processing of final pay, can place your business at risk of receiving penalties from the FWC.
What is included in termination pay?
An employee is entitled to the following in their final pay:
- any outstanding wages for hours that have been worked, including penalty rates and allowances; and
- any accumulated annual leave, including annual leave loading if it would have been paid during employment.
Additionally, the following will also need to be processed as a final payment if applicable:
What about award-free employees?
If your employee is not covered by a modern award that prescribes the seven-day rule, and their employment contract is silent on when their termination pay will be processed, then you have the discretion to continue to process your employee’s termination pay within your next pay cycle.
For more information on termination payments, clients should contact HR Assured’s 24/7 Telephone Advisory Service for advice. If you’d like more information about the benefits of becoming an HR Assured client, get in touch with us today for an informal chat.
Victoria Andrikopoulos is a Workplace Relations Advisor at HR Assured and assists a variety of clients via the 24/7 Telephone Advisory Service. She is currently studying for a Bachelor of Laws (Honours)/Bachelor of Arts.