Payments Upon the End of Employment

When an employee leaves your business, whether they resign or are dismissed, there are rules as to when wages and other entitlements must be paid to the employee. This was highlighted in the Federal Court’s Decision relating to Coles and Woolworths last year.

Modern awards contain clauses that allow for final pay to be made within seven days of the employee finishing. (See Clause 16.3 of the Horticulture Award, Clause 16.3 of the Pastoral Award, and Clause 18.3 of the Wine Industry Award).

However, these clauses relate to wages or entitlements under the award, not to entitlements that are provided for by the National Employment Standards (NES). These include annual leave and long service leave payments, notice of termination, as well as any redundancy payment.

The Court’s decision makes it clear that if the payment obligation arises from the NES, it trumps any award clauses that are more generous on timing. This means that even if an award says you can pay within seven days, you must still pay any relevant notice, annual leave, long service leave and redundancy on the last day of actual employment.

This means that employers need to distinguish between:

• Wages owed under the award (which may follow the award’s timing rules of up to 7 days); and

• NES entitlements (which must be paid immediately on the last day of employment).

If you have an employee leaving check with Andrew as to what is payable and when it must be paid.