While many modern awards state that termination entitlements are payable within seven days of termination, recent case law has stressed that statutory entitlements must be paid on the day of termination. Failing to do so constitutes a breach of the Fair Work Act 2009 (FW Act) and exposes employers and senior managers to penalties imposed by a Court.
This was recently reinforced in the decision of Jewell v Magnium Australia Pty Ltd (No 2) [2025] FedCFamC2G. In this matter, the Federal Circuit and Family Court of Australia imposed a penalty of $18,600 on the employer for non-compliance.
An overview of the matter
In the case, Dr Jewell’s final day of employment was 21 April 2023. However, rather than paying his termination entitlements on that day, Magnium paid it during standard payroll period – 12-days later. The Court held that this delay constituted a breach of sections 117(2) and 90(2) of the FW Act.
Furthermore, the Court found that Magnium had incorrectly assumed it was a small business. As a result of this assumption, Dr Jewell was not entitled to a redundancy payment. This misunderstanding was later rectified, and Dr Jewell’s redundancy entitlement was paid approximately three months later. Regardless, Judge Champion found that Magnium’s failure to pay Dr Jewell’s redundancy entitlement at termination breached the FW Act.
In total, Magnium failed to pay $72,784 in entitlements, including amounts for notice, annual leave and redundancy. Judge Champion noted that the employer had acted with reasonable promptness in making the payments and the breaches weren’t deliberate. Rather, they were a result of carelessness and ignorance of the law. Nevertheless, Judge Champion imposed penalties of $18,600, indicating that the Courts won’t tolerate technical or administrative breaches of the FW Act.
Key takeaways for employers
This decision is a timely reminder that termination entitlements must be paid in full on the employee’s final day. It also highlights that Courts are taking a stricter approach to technical breaches of the FW Act and are imposing financial penalties on employers for breaches. As a result, it’s crucial for employers to ensure that employees’ statutory entitlements are paid on the final day of employment. This includes payment in lieu of notice, accrued leave and redundancy pay. Delaying payment of statutory entitlements is risky and unlawful.
If you need advice on managing termination entitlements or want to ensure compliance with workplace laws, our experienced Employment Law team is here to help. Contact us today to discuss your legal obligations and minimise your risk.
