Forum Discussion

Contributing User

9 months ago

Solved

Deducting unworked notice period from Termination Pay

I have an employee that has resigned immediately without providing notice. I am going to deduct the equal amount of hours they have worked in the final pay week as allowed under the relevant award....

Isaiah_C
9 months ago
Hi Dmag,

If an employee resigns without giving the proper notice, you can deduct the equivalent hours from their final pay, but it's best to do this using a deductions category rather than a negative wage. That way, it's nice and clear for both payroll reporting and audit purposes.

Here's a handy help article that walks you through setting up deductions: Deductions.

Regards,

Sai

Isaiah_C

MYOB Moderator

9 months ago

Hi Dmag,

If an employee resigns without giving the proper notice, you can deduct the equivalent hours from their final pay, but it's best to do this using a deductions category rather than a negative wage. That way, it's nice and clear for both payroll reporting and audit purposes.

Here's a handy help article that walks you through setting up deductions: Deductions.

Regards,

Sai

Dmag
Contributing User
9 months ago
Thank you Sai, I appreciate the reply. I had thought the Deductions was more appropriate but now i need to work out whether it is pre or post tax, I'm assuming it will be post tax.
- Princess_R
  MYOB Moderator
  9 months ago
  Hi Dmag,
  
  Yes, it could be a post-tax deduction, but the rules can sometimes vary depending on what’s in the employee’s award or contract. To be safe, it’s best to double-check with the ATO or your accountant. I also found an ATO article that might have some really handy info for your question.
  
  Cheers,
  
  Princess
  - Dmag
    Contributing User
    9 months ago
    Hi Princess_R
    Thanks for your response. The Award and Contract both state that the unworked notice period can be deducted from the final pay (up to 1 week). The employee was within the minimum employment period but was required to give 1 weeks' notice. The rules surrounding the deduction, and the way this should be processed (via MYOB) are not clear and there is no specific guidance.
    In the end I made a business decision and paid the employee their final pay (did not deduct unworked notice) as I was not 100% certain the suggested methods from various sources (including Accountant) were accurate.
    Thanks for your input anyway.