Another court decision to really upset your payroll staff!

In our previous article [These recent Federal court decisions are going to really upset your payroll staff] we provided an early notification that courts were appearing to be taking a different approach to the usual industrial practice (next pay period), FWO website (7 days) and the FWC’s standard settlement agreement (7-21 days) by requiring all termination payments to be made on the date of termination and not some time after. That trend appears to be continuing following the decision of Jewell v Magnium Australia Pty Ltd (No 2) [2025] FedCFamC2G 676 where the Federal Circuit and Family Court of Australia awarded penalties against the employer due to its failure to comply with statutory obligations to pay termination entitlements to an employee on the final day of employment.

In this decision, the employer was certainly tardy being 12 days late in making payment for the accrued leave and almost 3 months late in making payment for redundancy. Accordingly, they were required to pay penalties of $18,600.

Our Take

We recognise that:

• such cases go against the previous ‘conventional wisdom’ where late payments were usually considered a technical breach, and often part of the negotiation process of the termination of employment;

• there is still genuine confusion about when employers are required to pay certain entitlements to an employee following their termination, including payment in lieu of notice, accrued but untaken annual leave and redundancy pay; and

• Payroll would generally prefer to pay all termination payments on the next ‘pay run’.

The building body of caselaw means that unless legislative change occurs (which we consider unlikely) employers are going to have to adjust their practices or run the risks of underpayment claims, claims for interest and penalties.

Action Items:

• Ensure that Payroll has the capacity to make a payment prior to other areas agreeing to a termination date or adopt appropriate strategies to delay the termination until you can (eg gardening leave)

• Train your payroll and management staff of this new obligation

• Take advice on settlement agreements to not unintentionally put your organisation into breach by agreeing to termination dates that can’t be met with payment terms

Edge Legal

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