Termination Pay: Key Changes For Employers

Published September 11, 2019 (last updated July 22, 2020) -

The Fair Work Commission has inserted a new clause into several Modern Awards, affecting the payment of wages when a worker’s employment ends.

The change means that if an employee’s employment terminates, then they must be paid any owed wages and entitlements within seven days.

Employers must ensure they payout any shifts worked by the terminated employee and if applicable, any payment in lieu of notice as well as leave entitlements and loadings.

This change affects multiple awards, including:

  • Horticultural
  • Hospitality (General) Industry
  • Pastoral
  • Registered and Licensed Clubs
  • Restaurant Industry
  • Wine Industry
  • Joinery and Building Trades Award
  • Children’s Services Award 2010
  • Aluminium Industry Award

It is expected that similar clauses will be inserted in other awards, to align the various awards in this regard.

Employers with employees under this award should also be aware of the details of this award, Employsure workplace relations expert Brandon Rigger says.

“If there is an application for a variation to a redundancy payment, the Fair Work Commission can allow employers to a longer period to make the above payments,” Rigger says.

“Some of the awards will also contain clauses indicating when and how (cash, cheque or electronic bank transfer, etc) the payments must be made. As such, these clauses may affect the seven day time frame.”

The change are now in effect, and employers must comply with the new clause. These changes are consistent with previous amendments, which inserted payment clauses into 89 of the 122 Modern Awards.

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