Deducting leave in advance from termination pay

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Deducting leave in advance from termination pay

Can this NSW employer deduct monies for long service leave granted in advance from the employee’s termination pay?

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Can this NSW employer deduct monies for long service leave granted in advance from the employee’s termination pay?

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Q  We have an employee in our Sydney office who was granted four weeks long service leave in advance of his entitlement. The employee has now tendered his resignation, having gained employment with another company. Because the employee is resigning without having completed 10 years continuous service with the company, he is not entitled to pro rata long service leave on termination. The NSW Long Service Leave Act 1955 allows an employer to deduct an amount paid in advance from monies due to the employee on termination, but there is no long service leave money from which a deduction can be made. Can we deduct the outstanding long service leave payment from other monies due on termination, such as accrued annual leave and wages?
 
A  The Fair Work Act 2009 (s324(1)(d)) specifies the conditions under which a ‘permissible deduction’ can be made from an employee’s remuneration. The Act provides that the deduction is lawful if it is authorised by or under a law of the Commonwealth, a state or a territory, or an order of a court. In this case, the deduction is permitted under the Long Service Leave Act 1955 (NSW); consequently, the long service leave owed by the employee to the company can be deducted from all monies due to the employee on termination of their employment.
 


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