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Statement of Termination Entitlements

Version 1.0 Updated 28 Mar 2018
Forms & Checklists Separation

Who can use this document?

This document can be used by all employers.

Commentary

It is good practice to give an employee whose employment has terminated (for whatever reason) a statement of termination entitlements. An employer must assess whether or not it is appropriate, according to the circumstances, to give a statement to an employee whose employment with the employer is ending. It also may be necessary to issue an employee with a separation certificate.

Providing a statement of entitlements does not relieve an employer from their duty to provide a payslip.

This statement should cover (where applicable in each case) the following:

  •     payments for time actually worked;
  •     payment in lieu of notice;
  •     accrued pro rata annual leave (plus loadings, where relevant);
  •     accrued pro rata long service leave:
  •     redundancy/severance payments (Note, from 1 January 2010 most employees are entitled to severance pay on redundancy. Legal advice should be sought in the event of a redundancy);
  •     bonuses or commissions; and
  •     any other payments made to the employee on termination of their employment.

 

The amount of tax deducted from each component should also be recorded.

This statement will not be suitable in all circumstances. What is provided here is a sample document. There may be payments for amounts (for example annual leave loading, redundancy payments and bonuses) in the statement that may not be applicable to the employee. Accordingly, it will be important for you to remove any reference in this statement to payments that do not apply to the employee whose employment has terminated (for whatever reason). If you are unsure you should seek legal advice.

The statement can also be customised to include other payments that may apply, including ex gratia payments (such as 'golden handshake' payments), disability or invalid payments, workers' compensation payments, special contractual payments, early retirement payments, other accrued types of leave, and unused roster days. An 'other payments' section can be developed to incorporate these payments. If you are unsure about how to amend the form to suit your business, seek appropriate advice.

It is advisable to state how each component was calculated, eg hourly rate of pay, number of hours or days of leave accrued, rate of tax, etc.

Superannuation entitlements should be provided in a separate statement issued by the superannuation fund.

The form does not set out details of the taxation treatment of termination payments. It is advisable that taxation advice be sought regarding the taxation treatment of each component of the termination payments before this statement is completed and given to the employee.

This form should be modified for use with casual employees. For most casual employees, payment (less taxation) for time worked will be the only payment (although long service leave may apply in some instances). However the terms of an applicable agreement or award must first be considered. You should seek advice if you are unsure.

Record keeping

Legislation and regulations require employers to make and keep certain prescribed employee records for seven (7) years.

For employers to whom the Fair Work Regulations 2009 (Cth) ('Regulations') apply, those Regulations require that where an employee’s employment is terminated, an employer must make and keep an employee record (separate from the statement of termination entitlements) which sets out the following:

  •     whether the employment was terminated:
    •         by consent; or
    •         by notice; or
    •         summarily; or
    •         in some other manner (specifying the manner); and
  •     the name of the person who acted to terminate the employment.
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