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Dmag's avatar
Dmag
Contributing User
11 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's avatar
    Isaiah_C
    11 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

     

Princess_R's avatar
Princess_R
MYOB Moderator
10 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's avatar
Dmag
Contributing User
10 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.

 

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