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Important changes to termination provisions in modern awards

November 13, 2018

Earlier this year, the Fair Work Commission determined that it was necessary to vary 86 modern awards that were silent on the time period within which termination payments are to be made.

Payment must be made within 7 days

The changes provide that employers must pay an employee’s wages and all other entitlements arising from the award or National Employment Standards no later than 7 days after their employment comes to an end.

In other words, employees must receive their outstanding wages, loadings, penalties, allowances, notice and annual leave accrual within 7 days of termination. Where applicable, redundancy pay would also need to be paid out within the required timeframe, subject to any order by the Commission permitting a delay.

This obligation took effect from 1 November 2018 and exists under the following awards relevant to our members:

  • General Retail Industry Award 2010;
  • Fast Food Industry Award 2010;
  • Hair and Beauty Industry Award 2010;
  • Storage Services and Wholesale Award 2010; and
  • Clerks – Private Sector Award 2010.

Employers may withhold one weeks’ wages

Additionally, the aforementioned awards have been revised to allow employers to deduct up to one week’s wages from an employee’s final pay where:

  1. the employee is over 18 years old;
  2. the employee has failed to provide the required amount of notice of termination under the award; and
  3. the deduction is not unreasonable.

The same entitlement exists in the Restaurant Industry Award 2010.

Crucially, employers cannot deduct this amount from entitlements due to the employee under the National Employment Standards. Employers will only be entitled to withhold one week’s wages from entitlements due under the applicable award.

Other employee entitlements following termination of employment (such as the entitlement to be absent for one day without loss of pay for the purposes of seeking other employment) have not changed and vary between the awards.

For further advice, contact one of our dedicated workplace relations specialists on 1800 RETAIL (738 245).

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