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Final payments for deceased employees – what businesses need to know

By CCIWA Editor 

In the event that an employee passes, outstanding wages and entitlements owing to the employee must still be paid by an employer to the estate of the deceased employee. In order for an employer to administer the final payment to the estate, certain documents must be obtained.

The principal documentary requirements for final payments to the estate of a deceased employee are:

  • a copy of the death certificate, and
  • a probate certificate.

The responsibility for obtaining these documents and providing them to the business lies with the executor of the deceased’s estate.

What is probate?

Probate involves a certificate being obtained from the Supreme Court which officially recognises the executor named in the will of the deceased.

It is generally recommended that when seeking probate a solicitor is consulted. Whilst it is not mandatory, the probate office requires a multitude of different documents and many protocols to be adhered to; a solicitor will be able to navigate this complicated system with ease and ensure compliance with legal requirements is met. In this instance, legal advice or representation is recommended.

What if there is no will?

If a deceased person does not have a will, validation of their estate and benefactors is not done with a grant of probate, but with a similar document known as ‘Letters of Administration’. In these circumstances, the Probate Office refers to the Administration Act 1903 to assess applications.

Legal advice should be sought in these circumstances - applications for a grant of Letters of Administration are complex and there are no standard forms available for this purpose.

I have the required documents, what do I need to do next?

Once a copy of the death certificate and the probate certificate has been obtained, the amount of wages/monies owing to the deceased employee must be calculated, along with a monetary figure for the lump sum payment of accrued annual leave and long service leave.

The above amounts should be principally calculated on the ordinary rates of pay for the deceased employee.

Employers are advised to consult with the Australian Taxation Office (ATO) to clarify the taxation implications for Eligible Termination Payments (ETP) to the estate of a deceased employee.

How should I pay?

Once the monetary amounts owing to the estate of the deceased employee have been calculated and verified, a cheque should be made out to “The Estate of <deceased’s name>.” Payment made via this method will ensure that only the executor of the estate of the deceased employee can actually clear the cheque.

When the probate certificate has been obtained through a solicitor, written instruction will often be provided from the solicitor to the employer for final payment. In these situations, it is not uncommon for the cheque made out to the estate of the deceased employee to be mailed to the solicitor’s office.

Employers seeking clarification on the process for payments to a deceased employee should consult the Employee Relations Advice Centre on (08) 9365 7660 or alternatively email advice@cciwa.com.

In the event that an employee passes, outstanding wages and entitlements owing to the employee must still be paid by an employer to the estate of the deceased employee. In order for an employer to administer the final payment to the estate, certain documents must be obtained.

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