People Smartz

Warning - Fair Work Ombudsman says Leave Loading Payable on Termination

Tony Perkins - Wednesday, March 02, 2011

The Fair Work Ombudsman has given advice that award wage employees are entitled to the payment of leave loading on termination of employment.

In the past it has generally been accepted that on termination of employment, a departing employee was entitled to the payout of annual leave accruals but not leave loading.  However, in a Senate Hearing a couple of weeks ago, the Fair Work Ombudsman announced that they had received legal advice from the Australian Government Solicitor saying that award wage employees "should now be entitled to loadings on untaken annual leave"

From our understanding here at People Smartz, this advice is based on the fact that the The National Employment Standards, which apply to all employees, actually say that employees must be paid out accrued annual leave payments at the rate they would have been paid if they had taken annual leave.  If leave loading is applicable to the employee - then this means that leave loading is payable on termination.

Has would be expected, the Federal Workplace Relations Minister - Senator Evans as backed the Ombudsman and the advice being given.  As also can be expected Employer Groups are not happy...

During a recent conversation with Fair Work Australia, we asked if employers would now be liable to backpay claims from employee.  Their reply was that " this would be applicable to employees who terminated any time after January 2010".  This also opens the possibility of complaints being lodged with the Fair Work Ombudsman regarding underpayment of entitlements.  If this occurs, we expect, and hope, that the FWO would treat such complaints on their merits.

So what do you need to do

  • First when calculating termination payments, you need to fact in leave loading (if applicable to the employee).  
  • Next - if you are approached by an ex-employee for the payment of leave loading (if they were terminated after January 2010), you need to backpay them their entitlement.

If you would like more information on this development - Contact People Smartz


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