As an employer, dealing with an employee’s resignation can be stressful and sometimes disheartening. This process can even be complicated when an employee fails to fulfil their obligations on resignation by not returning your business’ property. You may be wondering what steps you can take to recover your property in this situation and what protections you can put in place to avoid this situation in the first place. Hence, 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.
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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.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Key Takeaways
Unfortunately, exiting employees from your business can be a challenging task. If you need assistance recovering your business property from a former employee, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Including clear clauses in your employment agreements regarding the ownership and return of property will be the best step you can take to protect your valuable business assets. You should also consider implementing company policies regarding the appropriate use of company property.
Deducting money from an employee’s pay without their agreement or a court order may put you in breach of the Fair Work Act 2009 (Cth). Hence, you should seek advice from an employment lawyer before doing so.
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