Home - How do we proceed with a termination payment we are unable to finance?
May 08, 2021 on chapter Dismissal

We need to retrench two employees due to a downturn in business. As we are a small business, I understand there is not severance pay; however, the two employees have a considerable amount of leave and entitlements owing to them that we are unable to pay. What are our options?

Generally, small business employers are not required to make redundancy payments. However, you must ensure that you are not obligated to make payments in accordance with an industry-specific redundancy scheme as required by certain modern awards.

If the business is under financial strain, you can seek the employees’ consent (preferably in writing) to have the final pay paid in instalments. However, if the employees do not consent, you must pay their final pay in full in accordance with the terms of the employees’ contracts and/or the relevant modern award.

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