Introduction of seven day timeframe for termination payments in Modern Awards
Changes to modern awards have arrived
From 1 November 2018 the following model clause takes effect in 89 of the 122 modern awards:
Payment on termination of employment
- The employer must pay an employee no later than 7 days after the day on which the employee’s employment terminates:
- the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of termination; and
- all other amounts that are due to the employee under this award and the NES.
- The requirement to pay wages and other amounts under paragraph (a) is subject to further order of the Commission and the employer making deductions authorised by this award or the [Fair Work] Act.
(Some guidance notes are also included in the clause).
Which awards have been amended?
The modern awards that have been amended on 1 November 2018 to incorporate the above model clause include, but are not limited to, the following:
- Banking, Finance and Insurance Award 2010
- Cleaning Services Award 2010
- Clerks – Private Sector Award 2010
- Commercial Sales Award 2010
- Fitness Industry Award 2010
- General Retail Industry Award 2010
- Health Professionals and Support Services award 2010
- Legal Services Award 2010
- Local Government Industry Award 2010
- Medical Practitioners Award 2010
- Miscellaneous Award 2010
- Pharmaceutical Industry Award 2010
- Social, Community, Home Care and Disability Services Industry Award 2010
- State Government Agencies Award 2010
- Storage Services and Wholesale Award 2010
- Telecommunications Services Award 2010
A complete list of the 89 modern awards affected can be viewed here.
Background to the new clause
The insertion of the new clause in 89 of the modern awards is part of the Fair Work Commission’s four-yearly review of modern awards and aims to provide consistency between modern awards about when payments due to a departing employee are made. Historically, only 36 modern awards included a clause about the payment of wages and other amounts to an employee on the termination of their employment.
It remains to be seen if the Commission will amend the outstanding 33 awards (which are identified in the Fair Work Commission decision of 1 October 2018 accessible via the link above) to include the model termination payment clause set out earlier, or a revised version of it. We understand that the Commission will make determinations on a case by case basis.
What you should do
It is important to check if any of the modern awards applying to employees of your organisation have been revised to include the model termination payment clause set out above. If they have, it will be important to ensure that the termination payments referred to in the new clause are made to departing employees no later than 7 days after their employment terminates.
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