COVID-19 Updates

Death of an Employee

Here’s what to do when an employee dies.

Although hopefully a very uncommon occurrence, the death of an employee can be traumatic for staff and management. Here’s what to do when an employee dies.

In the event you are notified of the death of an employee, it is important that the person being notified confirms who the family contact/next of kin is, their contact details and information about the death such as when it occurred.

Payment to a deceased employee’s estate

As any outstanding entitlements of a deceased employee form part of the employee’s estate, to protect your interests a deceased employee’s final payment should only be paid to a person, usually the Executor, who can prove they are authorised to administer the Will. The Grant of Probate is the proof required.

Grant of Probate

Probate is the process of proving and registering in the State Supreme Court the last Will of a deceased person. When a person dies, somebody has to deal with their estate.

If you are confronted by the deceased employee’s next-of-kin regarding payment of their final pay you should treat the discussion sensitively. You should explain that you only make payment on the receipt of a copy of The Grant of Probate.

An Executor, Trustee, Administrator, Legal Representative or next-of-kin can apply for Probate.

Taxation

Generally, you should not withhold amounts from salary or wages paid after the death of an employee. This applies to income that was earned prior to death but paid after the death of the employee.

Similarly, you should not withhold amounts from payments for unused annual leave or unused long service leave paid after the death of the employee.

You may need to withhold from a death benefit employment termination payment (death benefit ETP). This means any amount that would have been an ETP if the employee was alive at the time of payment.

Examples include:

  • unused sick leave
  • unused rostered days off
  • a payment for redundancy or retirement (a ‘golden handshake’).

You should refer to PAYG withholding – death of an employee on the Australian Taxation Office website for more information.

Need more

For more information, contact a NatRoad advisor on (02) 6295 3000 or info@natroad.com.au