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FinManager33(I'm new)I'm new
1 Aug 2025

Hi,

We had an employee resigned effective immedietaly at the start of a fortrnightly pay period so they have not work any time during the pay period.

The employee was on a full time salary and required to provide one week notice as per their employment contract.

As such, we need to deduct one week from their final pay (38 Hours). They had 45.6 hours in annual leave entitlements.

What is the correct way to process this deduction on their final payslip? We are using Xero and want to ensure this is processed and reflect clearly.

Please let me know if further details are needed and any help would be appreciated.

Thanks

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3 replies
600 views
3 replies

All replies

PayrollDeanne(Taxicorn)Taxicorn
1 Aug 2025

Hiya @FinManager33 👋


That is definitely a Fair Work Ombudsman (FWO) matter 😉 The ATO doesn't define how much to pay or recover from employees, only how to classify the matter for tax, super and reporting purposes.


On the FWO hyperlink I gave you, scroll down to the sub-heading Notice and Redundancy and you will see the third paragraph explain that, after you've checked your industrial obligation, if you are recovering the failed notice, it can only be recovered from salary and wages, not from any other entitlements such as leave or ETPs. Be mindful of your other industrial obligations, such as deducting pay.


If you need assistance, it's the FWO you should contact 🤓


Deanne

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FinManager33(I'm new)I'm new
1 Aug 2025

Hi Deanne, Thanks for your response. That paragraph you are referencing looks to be applicable to employees under an award, whereas this instance is an employment contract. We are seeking the neccesary advice in this respect.

My query is more how this deduction should be processed on a final pay in line with ATO guidelines if you are able to provide any advice on this part?

Thankyou

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Employee Signed without Notice - How to Deduct One Week from Final Pay | ATO Community