Having an employee resign on the spot or simply stop turning up for their shifts is extremely inconvenient for any employer and business. Notice periods aim to avoid such inconvenience as they typically allow the time for a proper handover and ensure that any property or confidential information is returned to the business.

What is a Notice Period?

A notice period is a length of time that an employer or employee must give before the end of their employment. The following documents typically set out a notice period:

  • employment agreement,
  • Modern Award,
  • industrial instrument or
  • registered agreement.

How Much Notice Must an Employee Give?

If the National Employment Standards (NES) covers your employee, then the minimum notice periods that you must provide for permanent employees are:

Employee’s period of continuous service Notice
Less than one year one week
More than one year but less than three years two weeks
More than three years but less than five years three weeks
More than five years four weeks

 

For an employee who is:

  • over 45 years old, and
  • has served at least two years with you,

the notice period must increase by one week.

You should also confirm whether any applicable Modern Award, industrial instrument, or registered agreement requires additional notice or other requirements. Modern Awards typically require that the employee provide the same notice as employers under the NES (minus the additional notice on the basis of age).

Can I Refuse to Pay the Notice Period?

You must pay the employee’s notice period or pay in lieu of notice. Some Modern Awards may provide that you can withhold payment for the period of notice if not correctly given. However, this is not the case for all employees or Modern Awards. Consequently, you should seek legal advice before withholding any payment of notice periods or other entitlements.

Is Notice Always Necessary?

In some circumstances, as an employer, you do not have to provide notice. For example, you don’t have to provide notice if the employee has committed serious misconduct regardless of whether they are a casual employee or a fixed term employee. 

What if We Didn’t Sign an Employment Agreement?

If your employment agreement:

  • does not state what the notice period is or no agreement exists, and
  • no other Modern Award, industrial instrument or registered agreement applies,

then both the employee and employer must provide reasonable notice when terminating employment. The employer must also comply with minimum requirements under the NES.

Therefore, it is essential to include the notice periods for both your business and employees in your employment agreements. Executives and senior staff will typically have much longer periods of notice up to three months or even longer depending on their industry and role.

What is Gardening Leave?

Gardening leave is an alternative to having the employee work during their notice period or paying out the notice period and having them leave straight away. Gardening leave provides the employer with the option to continue employing the employee for the notice period without requiring them to attend work or complete their normal duties.

However, during this time, the employee is unable to work for another business and still bound by other obligations. Sometimes, executive and senior employees have longer gardening periods.

What if my Employee Resigns and Never Comes Back?

Upon resigning, even if an employee never returns to work, they have to receive their final pay and accrued entitlements. It is best to finalise this in the next pay cycle. You can send them a letter confirming acceptance of their resignation and final payment due to them. If they refuse to return to work it may be difficult to have them sign an exit deed or another similar document.

However, you should remind them of their post-employment obligations and ask them to return any property, confidential information or other sensitive information they may have in their possession.

Key Takeaways

As an employer, it is important to understand how much notice your employees are required to give and whether you can hold your employee’s pay if they don’t provide notice under the law. Having a written employment agreement signed by your employee stating the required notice period, that you may pay notice in lieu and may put the employee on gardening leave, is helpful in avoiding disputes. Having an internal process in place for when an employee resigns on the spot e.g. ability to remove them from IT systems, limits access to and therefore protects confidential information and client lists.

Being aware of issues surrounding resignation and notice ensures that your business runs smoothly and successfully. If you have any questions or need advice on notice periods, get in touch with LegalVision’s employment lawyers on 1300 544 755.

Edith Moss
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