An employer has recently been fined $17,000 in contravention of S90(2) of the Fair Work Act (payment for annual leave), for failing to pay an employee accrued annual leave at the time of termination. The payment was made three months after termination.
In addition to the fine, the employee was awarded $10,000 in damages, due to distress resulting from financial hardship.
This decision follows another recent decision in relation to a failure to pay notice in lieu upon termination. The Court found that, under section 117(2)(b) of the Fair Work Act (requirement for notice of termination or payment in lieu), payment in lieu of notice is a mandatory prerequisite to lawful termination and must be paid before the dismissal comes into effect.
This decision makes it clear that to be considered a lawful termination, notice payments must not occur after the date the employment has ended. Payment of notice and any accrued unused entitlements must be received by the employee on the day employment ends.
An employer has to give the following minimum notice periods when dismissing a permanent employee. However, notice periods do not apply to casuals; employees employed for a specific period of time; or employees terminated for serious misconduct.
| Period of continuous service | Minimum notice period |
| 1 year or less | 1 week |
| More than 1 year – 3 years | 2 weeks |
| More than 3 years – 5 years | 3 weeks |
| More than 5 years | 4 weeks |
An employee is entitled to an extra week of notice if they are over 45 years old and have worked for the employer for at least 2 years.
Outgoing employees should receive:
- Written confirmation of their termination (which states the date that the termination will take effect);
- Payment of any owed entitlements including any outstanding wages,
- The above notice period
- Accrued leave
- Redundancy pay (if applicable).
