Federal Court imposes fines for late payment of accrued leave following termination

Federal Court imposes fines for late payment of accrued leave following termination

Federal Court imposes fines for late payment of accrued leave following termination


The Federal Court has fined an employer $17,000 after they delayed paying a former employee accrued annual leave entitlements for three months after the employment relationship ended.

In evidence before Justice Elizabeth Raper, ‘Mr D’ submitted that his former employer HEAD Oceania Pty Ltd (HEAD), deliberately failed to pay his annual leave upon termination, was recklessly indifferent to the question of payment, and due to the sum being ultimately paid some three months after termination, caused him to suffer a financial loss.

In accepting his arguments, Justice Raper noted s 90(2) of the Fair Work Act 2009, which relevantly states, “If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employee must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave”.

It does not appear that the decision is authority to mandate that accrued annual leave must now be payable for every person on their final day of employment.

Indeed, most modern awards will specify an allowable period in which final payments can be made.

For example, the Building and Construction General On-site Award 2020 prescribes that employee entitlements must be paid within two or seven working days of termination of employment, subject to whether notice is provided.

In contrast, the Clerks – Private Sector Award 2020 requires entitlements to be paid within seven days of the end of the working relationship.

In the absence of a contractual or enterprise agreement provision, it is recommended that any outstanding amounts should be paid to employees within a maximum of seven days from their separation. For payments beyond seven days, you should seek advice.

Clearly, in this case, the delay by the employer in paying Mr D’s entitlements amounting to $8,022.82 for a period of three months was wholly unacceptable.

Although Justice Raper noted that the decision to delay payment was due to a misunderstanding of Australian law by a senior management employee of the company, she imposed a penalty of $17,000.

D v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484 (fedcourt.gov.au)

For queries about termination, payment of entitlements, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

Ref: 439.0524

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