Final Pay
Managing your final pay obligations Australia is a critical part of the termination process. When employment ends, employers must pay out all outstanding entitlements to stay compliant with Australian law.
What is Included in Final Pay?
An employer must pay the following entitlements:
- Outstanding Wages: Pay for all hours the employee worked.
- Allowances: Any penalty rates or specific allowances the employee earned.
- Leave Balances: All accumulated annual leave, including annual leave loading.
- Long Service Leave: Any accrued or pro-rata long service leave.
- Notice Pay: Payment in lieu of notice, if applicable.
- Redundancy: Redundancy pay if the situation requires it.
Importantly, you must pay out annual leave loading even if an award says otherwise. Most Modern Awards require payment within seven days of the end of employment. However, you should always check your specific registered agreement for different timeframes.
Employment Separation Certificates
Sometimes, the Department of Human Services requires an Employment Separation Certificate. This document helps the government verify job seeker status. Consequently, it ensures they pay the correct social security benefits. You can find more details at Services Australia.
NES Minimum Notice Periods
To meet your final pay obligations Australia, you must provide correct written notice. The National Employment Standards (NES) set the minimum notice periods based on how long the employee worked for you:
- Less than 1 year: 1 week notice.
- 1 – 3 years: 2 weeks notice.
- 3 – 5 years: 3 weeks notice.
- Over 5 years: 4 weeks notice.
If an employee is over 45 and has served at least two years, they receive one extra week of notice. The notice period begins the day after you inform the employee. Additionally, if an award requires a longer period, you must follow the longer timeframe.
Exceptions to Notice Requirements
While notice is usually compulsory, some exceptions exist. For instance, notice does not typically apply to casuals, fixed-term employees, or seasonal workers.
Furthermore, you do not need to provide notice for Serious Misconduct. In these cases, you can provide final pay immediately. For more details, please see our Misconduct Info Guide.
Protect Your Business
It is vital that you understand your final pay obligations Australia. Employees can file “unfair dismissal” claims with Fair Work if they feel treated unfairly. These claims can damage your reputation and lead to heavy penalties.
For more information click here
Assurance HR specializes in interpreting awards and creating employment agreements. We help reduce the stress of compliance. Call our team today on 1800 577 515 for professional support.
