Termination and payment is not always black and white

Can you withhold pay from your employee if they haven’t provided notice of termination?

This is another question that I wish I had a black and white answer for. One of the complications in payroll is that answers to many questions start with “It depends”.

And this is an example of such a question.

Employers should check the relevant modern award that relates to the employee in question to assist with an answer. Details on whether you can withhold pay from terminating employees may also be found in agreements or individual contracts.  Here you may find details of how much notice, if any, employees are required to give when they resign.

Employers should be aware that some modern awards, agreements and employment contracts provide that an employer can withhold money from an employee if they don’t give the required amount of notice.

It would be prudent for employers to ensure that they have the appropriate evidence available, such as a signed employment contract, before money is withheld. Something like this is not worth attracting the attention of Fair Work!

A statement saying “Notice of Termination is as per the NES”, in the employment contract does not mean that the employee is required to provide notice of termination. The statutory notice periods provided for by the Fair Work Act relate to employers only, not employees.

As with many things payroll, caution is recommended. You should be certain that you have the authority to withhold payments before you do so, and ensure you have the appropriate, defendable evidence.

Tracy Angwin is the founder and managing director of the Australian Payroll Association.