Notice Period for Employee Resignation

Author: Megan Adams & Jasmine Burrows, Progressive Legal

Resignation is an integral aspect of the employment landscape, and it is imperative for employers in Australia to grasp the legal intricacies and protocols associated with resignation notice.

For employers, a sound understanding of their obligations during the notice period is crucial, coupled with providing essential assistance to facilitate a seamless transition for the departing employee and those who take over their duties after they leave.

What is a resignation notice period?

A resignation notice period refers to the length of time an employee is required to notify you, as their employer, before their last day in employment. It includes the time between an employee handing in a letter of resignation until their last day of employment.  

Providing a notice period allows you to make necessary arrangements for the departure of the employee and plan for a smooth transition, especially if the role is critical or requires specialised skills. 

It ensures you have adequate time to search for a suitable replacement, either by hiring externally or promoting an existing employee. During the notice period, the departing employee can also help in the knowledge transfer process, ensuring that their responsibilities, tasks, and projects are handed over to their colleagues or successor effectively.

How can an employee give notice?

When an employee decides to resign, it is acceptable for them to give verbal notice expressing their intention to leave the company. However, it is best practice to ask your employee to provide their resignation to you in writing.  This allows you to preserve a formal record of the resignation.  

Written notice offers several advantages over verbal communication in the context of a resignation. First and foremost, it creates a tangible and documented record of the employee’s decision to resign. This written record serves as proof that the employee indeed initiated the resignation process, which can be vital for both parties in case of any future disputes or misunderstandings. 

Moreover, many employment contracts and company policies explicitly require that resignations be submitted in writing. By complying with this requirement, it ensures that the resignation process follows the established policies and procedures set forth by the business, fostering a consistent and organised approach to handling such situations. 

How much notice is required?

The amount of notice required when an employee decides to resign can vary depending on their employee’s award, enterprise agreement, other registered agreement, or employment contract. You should review these documents to determine the specific notice period applicable to your situation. 

For example, the Fast Food Industry Award requires employees to give the following minimum notice period when resigning:

Additionally, employees over the age of 45 may be entitled to an extra week of notice if they’ve been with your business for at least 2 years. 

If you want specific information about your relevant award and the minimum notice requirements, check out this Notice and Redundancy Calculator on the Fair Work Ombudsman website.  

It is important to note that while an employment agreement can extend this notice period, it cannot specify a shorter period than what is mandated by the relevant award or agreement covering the employee. 

You may wish to extend a notice period for employees who are highly experienced, work in a niche area, or are otherwise hard to replace.  You should remember, when extending a notice period, that the notice period if you choose to terminate will be the same length. 

What is reasonable notice?

If employee awards and employment agreements do not indicate your notice period, your employee will need to provide reasonable notice. The reasonableness of the notice period is determined based on various factors related to the individual employee’s circumstances, such as:

Age

Younger employees may be expected to give a shorter notice period compared to more experienced ones. 

Nature of Position

The complexity and responsibilities associated with the employee’s position may influence the appropriate notice period. 

Length of Service

Long-serving employees are generally expected to provide a more extended notice period. 

Remuneration Level

Higher-paid employees might be expected to give a longer notice period due to the potential impact of their departure on the business. 

Job Market Conditions

The amount of time it would reasonably take for the employee to find a similar job in the current job market can also be a relevant consideration. 

What happens immediately after an employee gives resignation notice?

During this period, it is important to understand that you do not have the discretion to accept or reject an employee’s resignation. Rather, your role as an employer is to acknowledge the employee’s decision to resign gracefully and professionally.

This acknowledgement can be expressed through a written acknowledgment or a meeting with the employee to discuss their departure and any potential handover or knowledge transfer requirements. 

Upon receiving notice, you should review the employment contract or company policies to ascertain the agreed-upon notice period.

This period can vary depending on the specific terms outlined in the contract or applicable employment laws. You should ensure that the employee’s stated notice aligns with these established requirements. 

What should happen during the resignation notice period? 

Throughout the notice period, it is important for you to maintain open lines of communication with the employee. You should be supportive and understanding, recognising that the decision to resign may involve personal reasons or career aspirations.  

By following these practices, you are not only respecting the employee’s decision but also fostering a positive work environment that emphasises professionalism and mutual respect.

Ultimately, this approach contributes to the overall well-being of the business and its employees, promoting a culture of cooperation and goodwill. 

This also prevents the potential problem of having to deal with disgruntled ex-employees. If you want more information on this, check out our article ‘Dealing with Disgruntled ex-Employees’ here!

What if you do not want the employee to work through the notice period?

If you wish to avoid having an employee work through their resignation notice period, you have several options available: 

Paying out the resignation notice period

You can refer to the terms of the relevant industrial instrument or employment contract to determine if you can pay out the entire notice period as specified by the employee. 

Reaching an agreement with the employee to stop working

Employers and employees can come to a mutual understanding where the employee stops working and receives payment for the remaining notice period. 

Seeking independent advice for alternative options

You may seek external advice to explore other possibilities, such as directing the employee to take paid leave (commonly known as ‘gardening leave’) for the duration of the notice period or paying out the notice instead of having the employee work it. 

Terminating the employee’s employment

You can choose to end the employee’s employment, providing them with the full notice period or payment in lieu of notice.

It’s essential for employers to consider their obligations when ending employment and be mindful that employees may have rights to lodge an unfair dismissal application with the Fair Work Commission if they believe they have been unjustly terminated even if they’ve handed in a resignation notice. 

What if an employee gives insufficient notice?

In certain situations, modern awards or enterprise agreements may grant employers the authority to withhold some wages if an employee does not provide sufficient notice of their resignation.

These regulations are put in place to ensure that both employers and employees adhere to the agreed-upon terms and maintain a fair and balanced working relationship. 

For instance, suppose the relevant award specifies a four-week notice period for resignation, and the employee only gives three weeks’ notice. In that case, you may have the right to withhold one week’s worth of pay to compensate for the shorter notice period. 

To enforce such wage withholding, the award or agreement typically outlines specific requirements that must be met:   

If you are considering withholding an employee’s pay for not providing enough notice, it is important that you seek legal advice urgently.  There is a risk that the employee may lodge an underpayment claim, which can come at significant risk to your business.   

Age Requirement

The employee must be at least 18 years old to be subject to wage deductions in these circumstances. This ensures that younger employees are protected from such practices. 

Limited to Wage Deductions

The withholding can only be deducted from the employee’s regular wages and not from other entitlements or benefits they might be entitled to receive. This safeguards essential entitlements like vacation pay, sick leave, or superannuation. 

Maximum Deduction Limit

The award or agreement will specify the maximum amount that can be withheld from the employee’s wages. This ensures that the deduction is reasonable and fair, preventing excessive financial burden on the employee. 

Reasonable Deduction

The deduction made from the wages must be considered reasonable in the given circumstances. It should not be an unfair financial burden on the employee, but rather proportionate to the breach of the notice period requirement. 

There are also other consequences that may arise from giving insufficient notice for example, taking legal action for breach of contract or not providing references for future employment.

What if an employee gives a longer than necessary notice period?

Some employees may give a longer notice period than necessary.  They may wish to finish working on a specific project or task, wish to handle the handover, or be aware that their role may be harder to fill than anticipated. 

If your employee gives a longer notice period, you do not have to accept this and may choose to only let the employee work the minimum notice period.  In the alternative, you may wish to pay out the minimum notice period. 

Who is not required to give notice?

If there are no specific rules in a modern Award, Enterprise Agreement, or employment contract stating otherwise, notice periods do not apply to the following: 

• Individuals working on fixed-term contracts; 
• Casual employees; 
• Employees terminated for serious misconduct; 
• Seasonal workers; and 
• Certain labour-hire employees. 

Key Takeaways

Resignation notice is a critical element in the employment relationship, carrying serious legal implications for employers.

By understanding the legal aspects surrounding resignation notice, employers can navigate this process effectively, maintaining a positive working relationship while adhering to their respective rights and obligations.

By upholding best practices and following legal guidelines, employers can ensure a smooth transition, fostering a respectful and professional work environment. 

If you are an employer trying to navigate resignation notices, don’t hesitate to contact our experienced workplace lawyers at Progressive Legal by calling us on 1800 820 083 or by requesting our advice below.  

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