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ABLA Alert - Does an employer have to pay annual leave loading on termination of employment?
06 August 2013
Does an employer have to pay annual leave loading on termination of employment?
A recent decision of the Local Court of New South Wales held that an employer must pay annual leave loading to employees on termination of employment. This is because the National Employment Standards state that an employee on termination of employment should receive a payment in lieu of annual leave at the rate that the employee would have received if they had taken the leave during their employment
What does this mean for your business?
This means that if an employee has an entitlement to annual leave loading such as under an award or enterprise agreement, the employee should receive annual leave loading as part of a payment in lieu for accrued but untaken annual leave on termination of employment.
Businesses should check the industrial instruments that apply to your employees (such as awards or enterprise agreements) to determine whether you will be required to pay annual leave loading on termination of an employee’s employment. If you are unsure whether you have this obligation, you should seek assistance as penalties can apply if incorrect termination payments are made to employees.
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