Summary
- When resigning from employment in Australia, employees must provide notice as specified in their employment contract, modern award, or enterprise agreement, with minimum notice periods ranging from one to five weeks depending on length of service.
- Employers can accept payment in lieu of notice or require employees to work through their notice period, and employees who fail to provide proper notice may be liable for breach of contract.
- Gardening leave allows employers to pay employees during their notice period whilst restricting them from working, which can protect confidential information and client relationships during the transition.
- This article explains resignation notice requirements for business owners and employers in Australia.
- LegalVision is a commercial law firm that specialises in advising clients on employment law matters.
Tips for Businesses
Review employment contracts to ensure notice periods are clearly specified and comply with minimum standards under relevant modern awards. Consider implementing gardening leave clauses to protect business interests when key employees resign. Document all resignation communications and maintain clear policies regarding payment in lieu of notice to avoid disputes.
On this page
- What is a Notice Period?
- Who is Not Required to Give Notice of Resignation?
- How Much Notice is Required?
- What Happens if Your Employee Gives Insufficient Notice?
- What Happens After Your Employee Gives Notice?
- Can the Notice Be Paid Out Instead of Worked?
- How Long Do I Need to Keep Employee Records?
- Key Takeaways
- Frequently Asked Questions
An employee’s notice of resignation is the formal period between when they announce their intention to leave and their final day of work. As an employer, you should ensure departing employees provide the required notice period, giving you time to find a replacement, arrange a proper handover, and retrieve company property or confidential information. This article will explain the notice requirements for an exiting employee and how much notice is required when resigning.
What is a Notice Period?
A notice period is the length of time that your employee must give to end their employment with you. The notice period is usually set out in the:
- employment agreement;
- modern award;
- industrial instrument; or
- registered agreement.
The notice period commences the day after your employee gives notice of resignation and ends on the last day of employment. Notice periods are not extended by public holidays or leave taken by your employee.
Who is Not Required to Give Notice of Resignation?
The below employees are not required to give notice of their resignation to you:
- seasonal workers;
- casual employees; and
- fixed-term (unless resigning before the end date of their contract).
As casual employees’ employment starts and ends on each shift, and they can offer or decline shifts that you offer, they are not obligated to give notice of their intention to stop working for you.
Fixed-term employees are typically employed for a set period in their employment contract, with a commencement date and an end date. These employees are not required to give notice when their employment ends on the expiration of the fixed term. However, if their contract includes an ability to terminate the contract early, the employee will need to provide the required notice in the contract if resigning.
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How Much Notice is Required?
Modern awards or enterprise agreements may specify the minimum period of notice your employees must give when they resign. For example, the General Retail Industry Award 2020 includes the following table of notice periods.
| Employee’s period of continuous service with the employer | Period of notice |
| Not more than one year | One week |
| More than one year but not more than three years | Two weeks |
| More than three years but not more than five years | Three weeks |
| More than five years | Four weeks |
Another award, the Clerks—Private Sector Award 2020, specifies similar notice periods. If you are unsure, it is best to engage a lawyer to help you access and interpret modern awards.
An employment agreement can extend the notice period but cannot specify less than the minimum requirements set out in the relevant award or agreement that covers your employee.
Your employee may only need to provide ‘reasonable notice’ to you before resigning if they:
- are not covered by a modern award or enterprise agreement; and
- do not have an employment agreement, or their employment agreement is silent about notice.
The notice period is ‘reasonable’ depending on the circumstances of your employee. Factors that are relevant include:
- your employee’s age;
- the nature of your employee’s position;
- your employee’s length of service;
- your employee’s remuneration level; and
- the amount of time it would take your employee to find similar employment.
For example, the reasonable notice period for a junior or less skilled employee is likely shorter than a reasonable notice period for a long-serving or highly skilled senior employee.
Ending the Notice Period Early
If an employee resigns and wants to leave their employment within the notice period, you may reduce their notice period by agreement. However, if you disagree with an employee leaving before the notice period ends, that employee should make themselves available to work.
If the employee does not attend work during this time, they are not entitled to be paid wages for the relevant period.
What Happens if Your Employee Gives Insufficient Notice?
Modern awards or enterprise agreements may allow you to withhold wages if your employee gives insufficient notice of their resignation. The award or agreement will often specify requirements for withholding payments, such as:
- your employee must be at least 18 years old;
- you can only deduct from wages owed to your employee and not from other entitlements such as annual leave or long service leave entitlements;
- a maximum amount you can deduct; and
- the deductions cannot be unreasonable in the circumstances.
For example, if your employee gives one week’s notice of resignation instead of the two weeks specified in the relevant award, you may be able to withhold one week’s pay.
What Happens After Your Employee Gives Notice?
There are a few steps you can take after your employee gives their notice of resignation. Firstly, check if your employee has provided sufficient notice. Your employee may give more notice than required. However, you do not have to accept the additional notice and ask your employee to work the minimum notice period.
Secondly, you should decide whether your employee will work during their notice period or receive pay in lieu of notice. Additionally, you can send your employee an email or letter to acknowledge their resignation and outline the final payment owed to them. The correspondence can include a reminder of your employee’s post-employment obligations, such as their duties concerning confidential information and intellectual property. The letter may also include the employee’s obligations to return all property belonging to the business.
Moreover, you should commence your internal process when an employee resigns, such as:
- arranging a formal exit interview;
- planning to hand over their work or clients; and
- preparing to remove them from IT systems.
For the duration of the notice period, you can require your employee to:
- work for the entire notice period;
- not to attend work; or
- perform reduced duties.
Further, you can agree that your employee takes paid annual leave during the notice period. Your employee can also take paid carers or sick leave during the period of notice. Ultimately, your employee should give you notice of the leave as soon as possible and provide any necessary evidence, such as a medical certificate.
If you do want your employee to work out the notice period and they refuse, you may be able to:
- withhold pay as per the terms of the applicable modern award or enterprise agreement; or
- take legal action against them.
Ultimately, taking legal action would be your last resort.
Can the Notice Be Paid Out Instead of Worked?
You can pay your employee in lieu of all or part of their notice period. However, if you choose to do so, you must pay your employee the total amount you would usually pay them if they had worked until the end of the notice period. This payment includes:
- incentive-based payments and bonuses;
- loadings;
- monetary allowances;
- overtime; and
- penalty rates.
Likewise, your employee’s employment ends on the date that you make the payment in lieu of notice. Hence, your employee does not continue to accrue entitlements such as annual leave. You should also require your employee to return all business property in their possession immediately.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
How Long Do I Need to Keep Employee Records?
It is important to remember that in Australia, you are required to keep accurate and up-to-date employee records for a specified period after an employee’s employment has ended. This requirement is outlined in the Fair Work Act 2009 and the Fair Work Regulations 2009.
Under these laws, you must retain employee records for at least seven years after the employment has terminated. These records include details such as the employee’s:
- name;
- date of birth;
- employment start and end dates;
- payroll records;
- hours worked; and
- leave taken.
If you have employed an individual whose arrangements differ from the award or registered agreement they sit under, you must keep records of the individual flexibility arrangement. You must retain a copy of the contract and a copy of any notice that acknowledges the termination of the flexible arrangement.
Keeping accurate and complete employee records is crucial for various reasons, including resolving potential disputes, ensuring compliance with workplace laws and regulations, and maintaining a comprehensive record of the employment relationship. As such, it is important to maintain robust record-keeping practices in place to meet your legal obligations.
Key Takeaways
Employee resignations can be unexpected and inconvenient for your business. Your employment agreement should outline the minimum notice periods to give you adequate time to rehire and organise a handover. You should also have an internal process to deal with resignations. Some key points to remember include that:
- if an employee provides insufficient notice, some modern awards allow you to withhold an amount of wages;
- you can choose whether to have the employee work through the notice period, pay them in lieu of notice so that they do not need to work, or a combination of the two; and
- employee records need to be kept for seven years after employment ends, including details like hours worked, leave taken and final pay calculations.
If you want further information about notice required upon resignation, LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced employment lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 1300 544 755 or visit our membership page.
Frequently Asked Questions
The length of time your employee must give to end their employment will vary based on the employment agreement, and if any industry awards are relevant. Likewise, the notice period may be shorter or longer, depending on the specifics of your employment agreement with them.
Modern awards or enterprise agreements may allow you to withhold wages if your employee gives insufficient notice of their resignation.
Yes, under the Fair Work Act, minimum notice periods increase with service length: one week for under one year, two weeks for one-three years, three weeks for three-five years, and four weeks for over five years, plus one extra week if you’re over 45.
Your employer may deduct payment equivalent to the unworked notice period from your final pay. However, you can negotiate an earlier finish date with your employer or use annual leave to cover part of the notice period.
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