When a payroll system switch goes wrong, documentation can make or break your case
A court has dismissed a Sydney employer's bid to avoid paying a terminated worker's accrued annual leave, rejecting a payroll software defence.
The Federal Circuit and Family Court of Australia handed down its decision on 11 March 2026 in Borlandelli v Sydney Luxury Smash Repairs Pty Ltd, a case touching on termination entitlements, leave record keeping, and the risks of undocumented payroll system changes.
Jorge Borlandelli had worked for Sydney Luxury Smash Repairs Pty Ltd (SLSR) under the Vehicle Repair, Services and Retail Award 2020. On 24 October 2024, SLSR terminated his employment without notice and did not pay him two weeks' notice pay of $5,441.64 or his accrued but untaken annual leave of $5,937.10. The annual leave figure appeared on SLSR's own final payslip.
Borlandelli had already commenced proceedings in the Fair Work Commission for unfair dismissal remedies. On 26 May 2025, the FWC found his dismissal "extremely unfair" and awarded compensation of $5,441.64 gross plus $625.79 in superannuation. He had also separately filed a small claims application in the Federal Circuit and Family Court of Australia for both the notice pay and the annual leave amounts.
After the FWC awarded the notice pay equivalent, the Federal Circuit and Family Court orders were amended on 8 August 2025 to remove that component, avoiding double recovery. The remaining question before the court was whether SLSR owed Borlandelli $5,937.10 in accrued but untaken annual leave.
SLSR argued the leave balance on its own payslip was wrong, for two reasons. It claimed that when it switched to new bookkeeping software on 1 August 2024, the system's default settings had automatically accrued annual leave on overtime hours, something the Award does not permit. SLSR's accountant put Borlandelli's true annual leave balance at $764.69, not $5,937.10. SLSR also alleged Borlandelli had taken 29 days of unauthorised absences, which it said should further reduce what he was owed.
The court found neither argument held up. On the software issue, Judge Manousaridis found the accountant "does not identify the source of these assertions" and produced no documents to confirm the software switch occurred, that the system contained the relevant default setting, or that it applied to Borlandelli's record.
On the unauthorised absences, Judge Manousaridis found that SLSR's receptionist, who had filed an affidavit on the matter, failed to identify the persons whose statements she had read, the information they provided, or the basis on which she concluded Borlandelli was absent on the 13 occasions she claimed. The court also noted the Fair Work Commission's earlier finding in the unfair dismissal proceeding that the employer's evidence on absences amounted to "vague hearsay", and that Mrs Pierce — the person responsible for maintaining SLSR's leave records — was never called to give evidence.
SLSR also raised allegations that Borlandelli had been financially indemnified through workers' compensation payments since his termination, and had allegedly misled insurer iCare. Evidence filed on SLSR's behalf also noted that Borlandelli's workers' compensation claim was ultimately rejected. The court found these allegations were not sufficiently articulated to defeat his annual leave claim.
The application to set aside the earlier judgment was dismissed. SLSR was ordered to pay Borlandelli's legal costs of $3,640.09. Judge Manousaridis found that "SLSR's actions in defending the proceeding Mr Borlandelli commenced in this Court were unreasonable from the outset."
For those managing terminations and payroll systems, the case illustrates several practical realities. Courts treat entitlements shown on an employer's own payslips as significant evidence of what is owed, and disputing those figures after the fact requires documented proof, not assertions. Leave records need to be consistently maintained and traceable to verifiable sources. Payroll software changes should be audited to confirm correct accrual settings, with that process documented. And when disputes head toward litigation, having the people who maintained employment records available to give evidence carries real weight.
