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Dmag's avatar
Dmag
Contributing User
6 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
    6 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
6 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
6 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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