Termination of employment and the relevant payments Regardless of whether you are an employer or employee, you should give either formal advance notice or wages in lieu of notice to your existing employer/ employee for the termination of an employment contract.
The length of advance notice (or the amount of wages in lieu of notice) for termination of a continuous contract of employment is determined as follows.
|Length of notice||Wages in lieu of notice|
|With an expressed agreement||As per the agreement, but not less than seven days||A sum equivalent to the amount of wages for the notice period|
|Without an expressed agreement||Not less than one month||A sum of not less than one month's wages|
If you are in a probation period, the required length of notice or the amount of wages in lieu of notice is determined as follows.
|Probation Period||Length of Notice||Wages in lieu of Notice|
|Within the first month of probation||Not required||Not required|
|After the first month of probation||With an expressed agreement||As per the agreement, but not less than seven days||A sum equivalent to the amount of wages for the notice period|
|Without an expressed agreement||Not less than seven days' notice||A sum of not less than seven days' wages|
For a fixed term contract without an expressed agreement on the length of the termination notice period, these requirements are also applicable on the condition that such a contract is a continuous contract of employment.
The items and amount of payments that are payable to an employee on termination of employment or the expiry of a employment contract depend on a number of factors such as the length of service, the terms of the employment contract and the reason for the termination of the contract. For quick reference, termination payments usually include:
- outstanding wages;
- wages in lieu of notice, if any;
- payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current leave year;
- any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period;
- where appropriate, long service payment or severance payment;
- other payments under the employment contract, such as, gratuity or provident fund payments.
Time of Making Termination Payments
An employer must pay all termination payments, except for severance payments, to the employee as soon as practicable and in any case not later than seven days after the date of termination or expiry of the contract.
For severance payments, an employer must make payment not later than two months from the receipt of a notice from an employee who is claiming a severance payment.
Offences and Penalties
Employers who fail to pay termination payments when they become due are liable to prosecution and, upon conviction, to a fine of $200,000 and to imprisonment for one year.