Annual leave payment on termination

Q&A

Annual leave payment on termination

The current provisions relating to annual leave in the federal jurisdiction are those specified in the WorkChoices reforms. Some employers are unclear about payment of annual leave on termination under WorkChoices.

WantToReadMore

Get unlimited access to all of our content.

The current provisions relating to annual leave in the federal jurisdiction are those specified in the WorkChoices reforms. Some employers are unclear about payment of annual leave on termination under WorkChoices.

Q. We recently terminated an employee who had completed seven months service with the company.

In attempting to calculate the employee's pro rata annual-leave termination pay, we could not find any reference in the annual leave Standard under WorkChoices as to the appropriate payment in this circumstance. Has WorkChoices changed this or have we overlooked the relevant provision in the Workplace Relations Act?

A. Under the WorkChoices Standard, an employee is entitled to receive payment for the balance of their accrued annual leave on termination of their employment.

The rate of pay must be at least equal to the employee's basic periodic rate of pay at the time the employment ceased. Annual leave is accrued on the basis of 1/13 of ordinary hours worked each four-week period.

For a full-time (38 hours) employee, this results in 11.7 hours annual leave accrued for each four weeks (1/13 of 152 hours) of continuous service.

The current hourly rate is the employee's 'basic periodic rate of pay', meaning the employee's ordinary hourly rate exclusive of bonuses/incentives, loadings, monetary allowances and penalty rates.

The payment of annual leave on termination is referred to in s235(2) of the Workplace Relations Act 1996.


Related

Annual leave & WorkChoices
 

Post details