Marlin HR enables robust handling of resignations without notice.
As per the Fair Work Act 2009:
- Employees who resign without giving the required notice may have an equivalent amount deducted from their outstanding wages
- However, any accrued annual leave must still be paid out in full
If there is an inconsistency, the National Employment Standards (NES) override any provision in a modern award or enterprise agreement.
For expert guidance, please consult the ATO, Fair Work Ombudsman, your employer association or a qualified tax accountant about:
- Employee payments (types and amounts)
- Tax withholding requirements
- STP codes for ATO submissions
Quick Reference
Deduction Earnings Type
To deduct from a terminated employee's pay, you will first need to add a new earnings type (System > Earnings) with the settings shown below.
A deduction type should not be used for this purpose, as the ATO only considers the amounts paid to the employee in termination pay and does not provide an STP reporting code for deductions. Instead, it is treated as a negative payment.
Termination Deductions
Payrun > Payrun Processing > Initialise > [Employee]
Calculate the total deductible earnings:
- Add all outstanding Earnings and Before Tax Allowances to the employee's pay run
- Add total Earnings and Before Tax Allowances
Do not include Unused Leave Payouts in these calculations
These must be paid in full.
Calculate the notice period value:
- Multiply the employee’s standard rate by the hours of required notice
For an employee working 38 hours per week at $30.3644/hour, who must give two weeks' notice:
38 × 30.3644 = $1,153.85 total notice period value
(or their usual weekly rate)
Calculate the deduction amount:
- Subtract the notice period value from the total deductible earnings.
You cannot deduct more than what is owed, even if the employee owes more notice. If the deduction exceeds total earnings, it is capped at the total outstanding pay amount.
Enter the deduction in the Earnings section:
- Earnings Type: Deduction in Lieu of Notice by Employee.
- Amount: whichever is lower of the notice period value or total deductible earnings (Earnings + Allowances)
- Toggle: Reduce Amount
In the above example(s) the notice period value $1.153.8472 is greater than the total deductible earnings value of $742.31 for 22 hours work, so only this lower amount can be deducted.
If the employee had worked a full week without giving notice, then the total notice period value could have been deducted, as there would be enough outstanding earnings from which to deduct it.