The Ombudsman has made two important changes in many Modern Awards relating to the capping of amounts that can be withheld from an employee that resigns but fails to provide the required period of notice, and a requirement to pay all owed wages and unused entitlements upon termination within a certain time period.  These changes took effect from 1 November 2018.

Please note that although the new requirements below have been applied to many Modern Awards, some Awards have not been affected by these changes, so you should check the Modern Award that applies to your business.

Withholding amounts now capped
If an employee resigns from his or her employment and fails to provide the required notice period, the employer may deduct from wages due to the employee under the relevant Award an amount that is no more than one week’s wages for the employee.  Any deduction made under the new clause must not be unreasonable in the circumstances.

Payment of Termination Pay must be made within 7 days
When an employee’s employment ends for any reason, the employer must pay the employee no later than 7 days after the termination date:

• the employee’s wages under the Award for any complete or incomplete pay period up to the end of the day of termination; and
• all other amounts that are due to the employee under the Award and the National Employment Standards (NES).

All standard Employment Agreements for Members have been updated to reflect the withholding caps.

Given the heavy penalties that may be imposed on an employer for breaching a Modern Award (up to $12,600 per breach), you should obtain professional advice and make every effort to comply with the above new requirements if they apply to your business.