My Employee Resigned But Has Not Returned Business Property. What Are My Options?

Summary

• Business property includes items such as laptops, phones, vehicles and confidential information that belong to your business and must be returned on resignation. 
• A well-drafted employment contract is the primary protection, requiring employees to return property promptly and in good condition. 
• You generally cannot withhold or deduct final pay unless authorised or legally permitted, as this may breach employment laws. 
• This guide explains employer rights and obligations when employees fail to return business property for business owners in Australia, prepared by LegalVision, a commercial law firm that specialises in advising clients on employment law.
• It provides a practical explanation of recovery options, contractual protections and legal risks when dealing with unreturned property.

Tips for Businesses

Include clear return-of-property clauses in employment contracts and remind employees of obligations on exit. Avoid withholding final pay unless legally permitted. Send a formal written demand if property is not returned, and assess whether recovery action is commercially worthwhile before proceeding.

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On this page

• What is Business Property?
• Employment Obligations Regarding Business Property
• Can I Withhold Money from My Employee’s Final Pay?
• Making a Claim
• Key Takeaways 
• Frequently Asked Questions

When an employee resigns but fails to return your business property, it can create practical and legal challenges for your business. While employees are generally required to return company assets, enforcing this depends on your employment contract and the steps you take after resignation. This article will provide some guidance on recovering your business property from an employee on resignation.

What is Business Property?

When your employee resigns, you must consider what:

• business property you own and require back; and 
• property may belong to your employee. 

Some property owners in the employment relationship will be clear. For example, this can include:

• business technology, such as laptops, headsets, and company mobile phones; 
• company vehicles; and 
• uniforms. 

Who owns the intellectual property may not always be clear and should therefore be stipulated in an employment contract. 

Employment Obligations Regarding Business Property

The best protection your business will have regarding the return of business property will be a well-drafted employment contract. Your employment contracts should stipulate the terms and conditions on which employees are to use, maintain and return company property upon termination of employment. 

A well-drafted return of property clause should clearly define what property belongs to your business or clients. It should require immediate return upon termination (or at any other time as reasonably requested). 

When an employee resigns from your business, you must provide written confirmation of your acceptance of their resignation. You must also provide written notice of termination where your business elects to terminate an employee’s employment. To ensure efficient handover following an employee’s resignation or termination, you should include a reminder of their post-employment obligations regarding your business property in this written correspondence would be prudent. 

Can I Withhold Money from My Employee’s Final Pay?

Sometimes, when an employee fails to return company property at the end, you may consider withholding money from their final pay. Whilst this can be a practical step to incentivise the return of the property, it can sometimes be a breach of the Fair Work Act 2009 (Cth). This is because an employee may make a claim against you for unpaid wages if you do not make the final payment following:

• a modern award that applies to them; or 
• as best practice, within seven days of their last day of employment. 

Similarly, electing to deduct money from the employee’s final pay may put you in breach of the law unless:

• the employee authorises the deduction in writing and is principally for the employee’s benefit; or 
• a court order or a Fair Work Commission order allows the deduction.

Making a Claim

You might consider initiating debt recovery proceedings to recover your business property. The first step involves sending your former employee a letter of demand for the unreturned property and the monetary value of the property. 

Nevertheless, you will need to weigh up the commercial value alongside the time and money costs involved in litigation. Additionally, there are some time limits on civil action, known as the ‘statute of limitations’. For much of Australia, this is six years. Therefore, you should speak to a lawyer before starting a court case. 

Employment Essentials Factsheet

As an employer, understand your essential employment obligations with this free LegalVision factsheet.

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Key Takeaways 

You should take practical steps to recover business property promptly after an employee resigns. Start with a clear written request and review contractual obligations. If necessary, consider legal action, but weigh costs carefully. Prevent issues by including strong return-of-property clauses and clear exit procedures in employment contracts.

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