It is common in business for employees to move on to ‘greener pastures’. When an employee resigns ‘on the spot’, there is little time for an employer to risk manage the departure, through such steps as ensuring all their work is finished or handed over to another employee, or even finding a replacement.
While it is not illegal for employees to resign without notice, an employee may be subject to consequences for failing to provide the correct notice of resignation to their employer. The issue of notice can sometimes be quite complicated for employees and employers to wrap their head around, especially for the employee minimum notice periods.
Minimum notice periods for employers
In Australia, the Fair Work Act 2009 (Cth) (“FW Act”) establishes that National Employment Standards (“NES”). In turn, the NES sets out the minimum employment entitlements that must be provided to all employees, including, but not limited to:
- weekly hours;
- various leave entitlements;
- public holidays; and
For employers, the minimum notice they must provide their employees is set out in s 117 of the FW Act. The relevant notice periods under s 117 are:
|Period of Service||Period of Notice|
|1 year or less||1 week|
|1 year and up to the completion of 3 years||2 weeks|
|3 years and up to the completion of 5 years||3 weeks|
|5 years and over||4 weeks|
However, this section of the FW Act makes no reference to the notice the employee is required to provide in return.
It should also be noted the requirements of this section of the FW Act are limited by the application of s 123 of the FW Act which outlines some exceptions where the employer is not required to provide this notice (i.e. casual employees or an employee terminated for ‘serious misconduct’).
Minimum notice periods for employees
For employees, s 118 of the FW Act states that modern awards of enterprise agreements can specify the period of notice an employee must give their employer to terminate their employment.
Most modern awards contain a ‘Termination of Employment’ clause, which requires an employee to provide the same period of notice as that required by the employer (i.e. the notice stipulated in the NES except for the additional one week’s notice for anyone aged over 45 years).
What happens if a modern award does not apply?
Where a modern award does not apply, the employee and employer may agree to contractual terms that specify a different notice period (providing it is equal to or greater than the minimum NES entitlement).
Therefore, while the notice required from each party is most commonly the same, the employer and employee may agree on minimum notice periods which are different for each party. For example, an employer may require an employee (who has completed his/her probation period) to provide them with 4 weeks’ notice (irrespective of their length of service), despite the employer only having to comply with the notice period in the NES.
Ultimately, as long as the employer complies with the minimum notice period in the NES, any additional arrangement is possible. Of course, if an employer seeks to require an excessive notice period (i.e. 12 months), it will likely impact on their ability to attract employees to their business.
What if the minimum notice period is not mentioned anywhere?
If an employment agreement:
- does not state the notice period (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.
In this instance, the employer is entitled to expect the employee will give notice equating to the expected period it will take an employer to obtain an acceptable replacement
As a result, it is common for executives and senior employees to have longer periods of notice up to three months or more (depending on the industry and the employee’s role).
What happens if an employee fails to provide the correct notice?
- there is a minimum notice period which an employee is required to provide under a modern award, industrial instrument or employment agreement; and
- the employee fails to provide this notice,
the employer may be entitled to withhold any money owed to the employee (e.g. outstanding pay), up to the equivalent amount that the employee would have earned if they had provided the required period of notice and had worked such notice.
For example, if an employee is required to give two weeks’ notice but only gives one, the employer can withhold one week’s wage and / or annual leave payments from the employee for failing to provide the required minimum notice.
Ultimately, the notice period an employee is required to give depends on the terms of an applicable:
- modern award;
- enterprise agreement; or
- employment agreement/contract.
Should none of the above apply to an employee’s employment, an employee must provide an employer with ‘reasonable notice’ which may vary depending on the nature of the employee’s employment. Relevant factors may include, but not limited to:
- the employee’s length of employment;
- the employee’s level of seniority;
- how many other people within the business have the same level of seniority;
- the nature of the employee’s position;
- the employee’s salary;
- the employee’s age; and
- the employee’s qualifications and experience.
What do the Wizards say?
An employer is ultimately required to provide an employee with the minimum notice prescribed by the NES. However, an enterprise agreement or employment contract can require the employer to provide a more beneficial entitlement.
For an employer who engages employees that are not covered by a modern award or enterprise agreement should include the notice periods for both the business and employees in individual employment agreements. This will reduce the possibility for confusion for both the employer and employee.
Similarly, employees who are considering resigning from their employment should ensure they provide the appropriate notice period as stipulated by the modern award, enterprise agreement or employment agreement applicable to their employment. If unsure, employees can liaise with their employer to ensure this process happens as smoothly as possible.
If you’re experiencing difficulties with employee resignations we can send you our free ‘How To Guide’ on navigating ‘Employee Abandonment and Resignation’, and discuss our resource pack which includes all the letters and tools you’ll need in the next instance of employee resignation! Just call Michael Stafford on 0488 689 998 (or email at email@example.com) to get the free guide, or to have a free, no-obligation chat about how we can assist you.