Employer fined for late termination payment

In the recent decision of Jewell v Magnium Australia Pty Ltd (No 2) [2025] FedCFamC2G 676, the Federal Circuit and Family Court of Australia imposed penalties on Magnium Australia Pty Ltd for failing to pay termination entitlements to an employee on the final day of employment.

Key Takeaways from the Decision

• Immediate Payment Obligations: The court considered an employer’s obligations to pay all termination entitlements, including notice pay and accrued leave, on the final day of employment unless otherwise stipulated by a Modern Award, Enterprise Agreement, or employment contract.
• Penalties for Non-Compliance: Magnium’s failure to make timely payments resulted in the court awarding penalties, highlighting the serious consequences of breaching payment obligations.
• No Excuse for Delays: The court rejected any justifications for delayed payments, reinforcing that employers are expected to be aware of and comply with their legal obligations promptly.

Importantly, this case considered payment in lieu of notice and reinforced the Court’s position that such payment is expected to be made on, or very close to, the day of dismissal, particularly if an employee is not required to work out a notice period.

This is contrasted to situations where employees are required to work through any notice period.

When are employers required to make final payment?

Under the Fair Work Act 2009 (Cth), while there isn’t a specific timeframe mandated for final payments, the Fair Work Ombudsman advises that employers should pay all outstanding entitlements within 7 days of the employment ending. However, certain Modern Awards, Enterprise Agreements, or employment contracts may stipulate different requirements, potentially necessitating payment on the final day.

Final termination payments typically include:

• Unpaid wages for hours worked up to the termination date
• Accrued and unused annual leave
• Accrued and unused long service leave (where applicable)
• Payment in lieu of notice (if applicable)
• Redundancy pay (if applicable)

This guidance does not make any reference to circumstances where employees are being paid in lieu of notice, which appears at odds with the Fair Work Ombudsman’s guidance.

Why is it different for employees being paid in lieu of notice?

Under the Fair Work Act 2009 (Cth), an employer is entitled to terminate employment by providing payment in lieu of notice. The payment must be equal the full amount the employee would have earned if they had worked through the notice period (including base pay, allowances, loadings, etc.).

While the Act doesn’t explicitly state “same-day payment,” the courts and the Fair Work Ombudsman interpret it to mean payment must be made at the time of dismissal when notice is not provided or worked.

Practical Implications for Employers

The Jewell v Magnium case serves as a cautionary tale for employers:

• Review Agreements: Ensure that all employment contracts, awards, or enterprise agreements are reviewed to determine specific obligations regarding termination payments.
• Prompt Payments: Aim to process all final payments on or before the last day of employment to avoid potential penalties.
• Notice Periods: If possible, employers should try to use notice periods in a manner which aligns them with the employer’s pay cycle, or in a manner which allows the pay cycle to be completed within 7 days of the dismissal date.
• Seek Advice When Uncertain: If there’s any ambiguity regarding payment obligations, consult with legal professionals or the Fair Work Ombudsman to ensure compliance.

Adhering to these practices not only ensures compliance with legal obligations but also fosters trust and goodwill with departing employees.

If you have any questions in relation to your obligations as an employer, or your rights as an employee, please do not hesitate to contact our team.