When do I have to make payment of a termination pay?

There is nothing in the Act to determine when a payment must be made when an employee’s employment is terminated.

There is so much to do for a final pay, and it can become a rushed activity on the final day of employment with the potential to get it wrong.

If agreed between the parties, then it can be paid on the next pay day after termination or on the final day of work.

I would recommend that it’s paid in the pay following termination.  Having a company policy, or having it included in your employment agreements means there is a clear expectation of when the final pay will be made.

Here is a sample clause that could be included in your employment agreements:  “when the agreement is terminated, the employees final pay will be paid in the next pay period from the actual date of termination

We cover this in more detail, as well as how to calculate termination pays in our Payroll Legislation Training Courses via the Small Business Training Hub.  If you would like help, or would like to more about our training course, let us show you how we can help.

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