Payment in Lieu of Notice

• Give the employee the applicable minimum notice period, or
• Make a payment in lieu of notice before the employment ends.

Did you know that if you make a payment in lieu of notice, you must do so before the employee’s employment ends? This is required by the minimum notice provisions in the National Employment Standards (NES).

Failing to make this payment before termination breaches the Fair Work Act, but it doesn’t invalidate the termination itself. The termination remains effective on the date it occurred. However, employees can seek compensation for any loss suffered due to late payment, such as a week’s pay if the payment was made a week after termination.  Employees might also seek a pecuniary penalty, though it may not be significant if the delay in payment is short.
 
To avoid these issues, ensure your termination practices comply with this requirement. Note that while employment contracts often have longer notice periods than the NES minimum, you only need to pay the minimum amount before termination, although the full contractual amount will still be owed.