If your business has employees, you must notify them and officially finalise their employment before your business closes.
Letting go of employees can be difficult. Good communication is key to making the time easier for both yourself and your employees. You may wish to talk to your employees straight away to explain the situation to them.
No matter how you inform your employees, you are required by law to give them official notice in writing by either:
- delivering the notice personally
- leaving the notice at your employee's last known address
- sending the notice to your employee's last known address by pre-paid post.
You must provide your employees with the right amount of notice of ending employment (also known as a notice period). The notice period will vary depending on how long your employee has been working for you, and the type of employee they are (e.g. you don't need to give a notice period if your employee is casual).
Find out more about notice periods
on the Fair Work Ombudsman website.
Paying out entitlements
There are some entitlements, including any outstanding wages and any accrued leave, that you need to pay out.
The final entitlements you need to pay your employees will vary depending on several factors, including:
- the terms of your existing contract
- the relevant Modern Award
- the number of employees your business has
- whether the employee is entitled to redundancy
- if long service leave is payable.
Read the Fair Work Ombudsman's final pay
information to find out how to finalise pay for your employees.
Employment termination payments (ETP)
You'll also need to pay ETPs if your employees are eligible. An ETP may include:
- payment in lieu of notice
- a gratuity or 'golden handshake'
- compensation for the loss of a job
- unused rostered days off
- unused sick leave.
Find out more about taxation of termination payments
on the Australian Taxation Office (ATO) website.
Finalising taxes for employees
Whether you've sold or closed your business, there are also a number of tax issues that you need to finalise for your employees. These can include:
Visit the ATO website
for more information on what you need to do when your employees cease employment.
Supporting your employees
Keep in mind that some employees may find the change stressful. Communication is key. To support them, consider giving them as much notice as possible so they have time to think about their options.
Treating your employees fairly will help to ensure they continue to work efficiently and give you plenty of notice if they move on to new jobs.