Terminated an employee? Find out if they need a Separation Certificate.

Terminating an employee can be stressful, so it is important that you and your business comply with certain legal obligations. One of these obligations is to fill out and complete an Employment Separation Agreement upon request.  As of 1st January 2021, there is a possibility that once you are terminated, you can ask your employer to provide an Employment Separation Certificate when applying for income support payments. 

What is an Employment Separation Certificate? 

The Employment Separation Certificate is used by Centrelink to determine whether a person is entitled to receive unemployment benefits. It is issued by the government to show basic details of someone’s employment. The Centrelink Employment Separation Certificate includes, but is not limited to: 

  • The period of their employment; 
  • Details of final pay;
  • Employment details;  
  • The reason for termination of employment – this can be a variety of reasons such as redundancy, contract coming to an end, underperformance or resignation; 
  • How much they were earning when they left; 
  • Any unused leave payments; and 
  • Redundancy payments. 

The Centrelink Separation Certificate allows employees to apply for unemployment benefits through Centrelink. Some of these benefits include Newstart Allowance, Youth Allowance and sometimes Parenting Payments. Occasionally, the Government will grant benefits to an employee who has been given reduced hours or their employment type has changed from full-time to casual. The Certificate ensures that any waiting periods or non-payment periods are correctly assessed so a former employee can receive their first payment on time and when they need it. It assists the Government with allocating an amount that may be payable to you. Moreover, Centrelink uses the Employment Separation Certificate to confirm other information, such as, whether you are unemployed, the date your employment ended, your previous weekly pay, any leave accrued or taken, redundancy or compensation payments received at the end of your employment, ect.  

Does an employer have to provide a separation certificate? 

An employer may provide you with an Employment Separation Certificate upon your termination of employment. However, this is not always the case. An employer is only sometimes required to provide an Employment Separation Certificate. Usually, the employer is only required to provide such a certificate if their employee requests one. Alternatively, an employer is required to provide a separation certificate if Centrelink or another Government agency requests it. Services Australia may request an employer to provide an Employment Separation Certificate for an employee that has been terminated, or had hours either decrease or change from full-time to casual work. If an Employment Separation Certificate has been requested, the employer has 14 days to provide the certificate.

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What if my employer will not give me a Separation Certificate? 

If your employer, upon your request, has refused to provide you with an Employment Separation Certificate, you should inform the relevant Government body. If the relevant Government body finds your reasons appropriate and reasonable, they will likely:

  • Contact your employer directly to receive the Employment Separation Certificate, and may consider disciplinary actions against the employer; or 
  • Grant the payment and obtain the necessary information at a later date. 

Therefore, a former employee can still receive unemployment benefits without proof of the Employment Separation Certificate. However, the onus is on the employee to show that the inability to receive an Employment Separation Certificate is not their own fault. 

Alternatively, there are situations in which you are not required to provide a certificate. A former employee is not required to provide an Employee Separation Certificate if they have been unemployed for at least 12 months. 

A former employee who has been employed in the last 12 months is not expected to provide a certificate if they:

  • Suffered sexual harassment or violence at the workplace; or 
  • The previous employer has ceased business. 

In these situations, Centrelink will seek to verify your employment details using other means. To verify your details, Centrelink may: 

  • Phone your previous employer; or 
  • Send a letter requesting an Employment Separation Certificate on your behalf. 

Otherwise, if the employer has ceased business, Centrelink will check: 

  • Your last pay slip; and/or 
  • Letter of your termination/resignation. 

If your employer provides you with an Employment Separation Certificate, they can submit the certificate online. If you need to complete the certificate in a circumstance other than termination, your employer needs to fill out the ‘reason for separation’ section of the certificate. This is to provide additional information clarifying the change in circumstances of your employment. 

Employers can submit your Employment Separation Certificate online using the Business Hub. To do so, your employer must register the business in Business Hub. Alternatively, your employer can provide you with the Certificate, or they can fax it to Services Australia.

If you have received a payment for either redundancy, annual leave, long service leave, sick leave or maternity leave, then there may be a waiting period before Centrelink can provide you with income support. You may also experience a waiting period depending on the value of your liquid assets available.  

It should be noted that all the information contained in or attached to the Employment Separation Certificate can be released to any person under the Freedom of Information Act 1982 (Cth). However, if you prefer your information to remain confidential, you must attach a statement outlining your reasons when submitting your certificate. 

Furthermore, if you ceased work voluntarily or were dismissed due to misconduct and still want to receive Centrelink benefits, you are required to serve an Unemployment Non-Payment Period. Voluntary separation from work includes retirement or resigning. Therefore, you are not entitled to request an Employment Separation Certificate. 

If you require further assistance with your employment matters, you should seek legal advice. Legal Kitz can provide you with further information and assistance in getting an Employment Separation Certificate. Our Legal Kitz business specialists can assist with ensuring that your concerns are heard and provide you with advice that is tailored to your circumstances. You can book a free 30-minute consultation via our website.

To learn more about employer obligations click here.

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