$66K Fine Over “Employee Entitlements”
Running a small-medium business is hard work.
Most small businesses are facing labour shortages and rising costs. Meanwhile, the legal requirements keep getting more and more complex.
For example, the Federal Court could fine a business up to $66,000 for failure to pay unused annual leave.
Fine for Unused Annual Leave
There was a case during 2024 when a business was fined $17,000 for not paying an ex-employee’s unused annual leave on or before their date of termination.
This previous employee had over $8,000 of unused annual leave.
The business calculated all the former employee’s dues and paid him in full, but 3 months later. However, the federal court said you have to pay everything BY the date of termination. They were then fined $17K.
Who Is At Risk?
This isn’t just about big business – all business owners are affected.
Except the big corporations can always hide behind their expensive legal teams. Small- medium business owners like you and me don’t have that luxury.
In a recent federal court case (Dorsch v HEAD Oceania Pty Ltd, 2024), the judges ruled organisations must know their legal obligations. Ignorance of the law or mistaken belief is no excuse.
So, our best bet is to know the rules and avoid complications.
Avoiding This Fine
You are at risk if you do not pay former employees all their dues by the date of termination.
It doesn’t matter whether they resigned or were let go.
I imagine your priority would be filling the gap and keeping things running smoothly. Mine would be the same.
But any delays in paying the former employee can lead to trouble. Don’t let this happen to you.
3 Simple Steps
- First, work with payroll to figure out exactly what you will owe if you terminate someone. Do this BEFORE you let them go.
- Prepare everything BEFORE you take action. And, of course, keep all conversations discreet until the last minute.
- If the employee got notice, pay all amounts, including unused leave before their last day.
If the employee was NOT given notice, pay all amounts, including unused leave, before you give them their termination letter.
Doing this not only keeps you compliant but also builds trust with your team.
It helps you grow your employer brand and attract better staff. It makes your staff feel valued, and less likely to look for work elsewhere.
You see, it’s not just about the fines. It’s about building a business you can be proud of.
The Dream You’re Working Toward
These laws are necessary, but the way they’re implemented can make life difficult for employers.
You want to grow, to succeed, to provide for your family, and give your team a great place to work. But getting bogged down in legal issues or employee problems can derail that dream.
If you’re reorganizing the team, or expecting you may need to replace someone, then check all the laws first.
If you’re not sure about the risks, we can help with a free consultation. Contact us or call 07 3483 0100 for help.
