When Do You Have to Pay Termination Payments?

It is not uncommon for employers to have a practice of making termination payments in the next pay cycle following termination of employment. This reflects the standard termination provisions in the Pastoral Award, the Horticulture Award and the Wine Industry award amongst many others. These Awards state that termination payments must be paid no later than 7 days after the day on which the employee's employment terminates.

However, the Courts look at the legislation (which overrides the Awards). The legislation states that all termination payments must be paid on the employee’s last day of employment.

What amounts form part of an employee's final pay?

An employee's final pay usually comprises:

1. wages and allowances owing up to the termination.

2. any accrued but untaken annual leave, including annual leave loading,

and, depending on the circumstances, might also include:

1. payment in lieu of notice;

2. redundancy pay; and/ or

3. accrued or pro-rata amounts owing in respect of long service leave.14

Employers must comply with the legislation and pay the entitlements on the last day of employment. Otherwise, large fines can be imposed on the employer.