Effective 1 November 2018, two significant changes that affect termination of employment have been made to most Modern Awards.
1. Withholding amount for insufficient notice now capped
If an employee resigns and fails to provide the required notice period, the employer may deduct from wages due to the employee under the relevant Award an amount that is no more than one week’s wages for the employee. Any deduction made under the new clause must not be unreasonable in the circumstances.
2. Payment of termination pay
When an employee's employment ends for any reason, the employer must pay the employee no later than 7 days after the termination date:
- the employee’s wages up to the end of the day of termination; and
- all other amounts that are due to the employee under the Award and the National Employment Standards (NES).
This is likely to impact employers who process payroll on fortnightly and monthly cycles.
We recommend employers check the latest versions of the Awards applicable to your business and any employment contract templates you use.
If you have any questions about how this may impact your business, do not hesitate to contact us.