What happens when a trusted employee of 15+ years claims they’re owed over $20K in backpay? For one small business owner, it meant stress, legal letters - and a powerful reminder of why investing in the right accounting and bookkeeping partner pays off.
The Client
John (name changed for privacy) is a long-time client who has worked with SMART Business Solutions for over a decade. We’ve supported his
small business through accounting, tax, and bookpeeing including payroll - helping him stay compliant and confident while
focusing on what he does best.
The Situation
About 18 months ago, John's long-standing employee, Jane (name changed for privacy), chose to move on after 15 years with the business. Their relationship was friendly - more like family than employer and employee - and they parted on good terms.
So it came as a shock when John received a lawyer’s letter demanding more than $20,000 in backpay. The letter, issued on Jane's behalf, claimed she was owed accrued long service leave and annual leave, and additional super on her long service leave. The demand came with a strict 14-day response deadline.
Needless to say, John was stressed. Facing a possible five-figure payout, he began to question whether he had missed something at the time
of Jane's departure. The financial impact of such a payment would be significant, and the emotional toll even greater.
The Response
John immediately contacted the SMART Business Solutions team.
Because we’ve been managing his bookkeeping and payroll through Xero for nearly 10 years, we had everything we needed to get to work fast. Our team accessed past payslips, payroll summaries, superannuation records, and bank payment confirmations, all clean, compliant, and in order.
Within hours, we were able to confirm that:
In short: John had done everything right.
The Outcome
With SMART’s help, John had the documentation and confidence to respond to the legal claim with evidence in hand. No further action was needed, and no payout was required. The claim was withdrawn.
More importantly, John felt reassured. His records were accurate, his obligations had been met, and his decision to invest in quality
accounting and payroll support had clearly paid off.
The Lesson
This case highlights a critical truth for small business owners:
When you have employees, you carry real obligations, and the risks of getting it wrong can be costly. But when you’ve got the right systems and expert support in place, those risks are minimised, and your peace of mind maximised.
As John put it: “You can try to DIY these things, but what if you get it wrong? It’s not worth the stress.”
At SMART Business Solutions, we don’t just do your books, we make sure they’re done right. With structured systems, clean records, and proactive support, we help business owners sleep better at night knowing they’re covered.
On 31 March, the Fringe Benefits Tax (FBT) year ends. With the ever increasing budget deficits, the ATO will be reviewing whether all employers who should be paying FBT are, and that they are paying the right amount. Who needs to lodge a FBT return? Find out here.
