Case study – payment of accrued leave
Are you aware of your requirements when paying out accrued leave to your staff if they resign or their employment has been terminated?
A recent case has highlighted the importance of being across your obligations as an employer regarding the payment of accrued leave on termination of employment.
An employer has been hit with a $17,000 fine for delayed payment of a terminated employee's accrued annual leave, plus damages. This case sets an important precedent for employers and refers to an employee who received payment of their accrued but untaken annual leave three months after their termination. The Federal Court held that this payment was three months late and as a result handed down a penalty of $17,000. A further $10,000 damages was also paid to the applicant due to the financial stress he experienced as a result of the lateness of his payment.
Whether an employee leaves your organisation voluntarily, is terminated, or dismissed as a result of redundancy, you must pay them their unused annual leave.
In the case of this particular employer, they submitted that the delay in payment was “due to limited knowledge of Australian employment law and the concerns about the accuracy of leave records”. The Court highlighted that “all employers must know and understand their obligations under the FW Act and that lack of care and ignorance of the law is no excuse”
If you are unsure of your obligations relating to the payment of accrued leave, please reach out to the Workplace Relations Team on 07 3872 2264 or at workplacerelations@amaq.com.au