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The FWC is soon to introduce new provisions into modern awards to limit employers’ ability to deduct amounts from monies owed where an employee does not give the required amount of notice of termination when they resign.

If an employee does not give the required amount of notice of termination, many modern awards currently contain a provision allowing an employer to deduct from wages owed on termination an amount equivalent to the notice not given, as expressed in the following example terms:

…If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award or the NES, an amount not exceeding the amount the employee would have been paid under this award in respect of the period of notice required by this clause less any period of notice actually given by the employee.1

In a recent decision,2 the FWC confirmed that it will introduce a new model award term covering employee notice of termination, which will impose a one-week cap on the amount that can be deducted, plus an additional caveat that the deduction must not be unreasonable in the circumstances, and must not be deducted from the wages of an employee younger than 18. The full model clause can be viewed at Attachment A to the decision. Under the new model award clause, an employer will only be permitted to deduct from wages, not from other “monies due” (e.g. from accrued annual leave).

The FWC will publish draft determinations reflecting the above change for each modern award in due course. Interested parties will be given the opportunity to make submissions about the final form of the change in respect of any particular award, and any award-specific considerations will be taken into account before settling the final clause.

There is no precise timeframe for when this change will ultimately be implemented, however employers should be aware that most modern awards are likely to be varied in this way by early 2019.

Please note that if you have any award-covered employees with contracts or letters of offer that specify notice provisions that are inconsistent with the new clause, those provisions will need to be reviewed.

If you are currently renegotiating or have plans to renegotiate an enterprise agreement, we can provide you with specific advice on how these changes will impact you.

Require further information/assistance?

If you require further information or advice, please contact one of our consultants.

1 Example: Clerks – Private Sector Award 2010, clause 13.2.
2 See 4 yearly review of modern awards – plain language re-drafting – standard clauses [2018] FWCFB 4177 (Attachment A).

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