When an employee leaves your employment, they may have to work a notice period or lose some of their final pay. It all depends on whether they are covered by an Award, Agreement or employment contract. You will need to know what terms apply.
Many Awards say that if an employee gives a four week notice period for resignation but only works two weeks, for example, you are allowed to withhold two weeks’ pay from their final pay. Some Agreements have similar provisions if the employee fails to work the required notice.
One potential exception to the rule is when notice is given because of redundancy. Some Modern Awards provide that an employee can leave at any time during notice of redundancy, without losing any pay.
Typically, an employees’ Award, registered Agreement, or employment contract will set out how much notice (if any) an employee has to give when they resign. But this depends on the Agreement terms and type of employment.
A part-time employee can expect to work regular hours and receive ongoing employment. That’s why most Awards, registered Agreements, and employment contracts specify that a part-time employee has to give you, the employer, notice when they resign.
But under the National Employment Standards (NES) a casual employee is not required to give notice upon resignation. Likewise, you the employer do not have to give notice when terminating a casual employee.
Once you receive notice of resignation from an employee, you can either:
If you pay out the notice period, you have to pay the employee the exact same amount they would have received if they worked out the notice period.
When you end an employee’s employment in most cases you have to give notice, or pay in lieu of notice. You do not have to give notice to casuals, seasonal workers, fixed-term workers on the expiry of the contract term, daily hire workers in the building construction or meat industries, or employee’s fired for serious misconduct.
The amount of notice you have to give depends on the employee’s number of years of continuous service. Below are the minimum notice periods for each period of continuous service:
Employees over 45 years of age with at least two years of continuous service are entitled to an extra week of notice of termination.
When you terminate an employee’s employment, you must give the employee an employment termination letter. The letter should clearly state the reason for the termination, the date of the employee’s last day of work, and the fixed amount of entitlements and unpaid wages the employee will receive.
When an employee’s employment ends you have to provide a final payment notice – in writing – which sets out the wages and entitlements you owe. It is your responsibility to ensure the last pay slip is delivered on time and correctly calculated.
To calculate an employee’s final pay, refer to the applicable modern award, registered Agreement or employment contract to find out what entitlements you owe. While each contract is unique, you will most likely need to calculate one or more of the following entitlements:
Trying to make all of these calculations can be tricky. Fortunately, you can speak to a workplace relations specialist at Employsure to find out how much unpaid wages and entitlements you owe – and get peace of mind knowing the amount is accurate.
Check the terms of the employee’s Modern Award, registered Agreement or employment contract to find out the final pay due date. If none of the documents say so, you can process the final pay on their next scheduled pay day or last day or work.
In the lead up to a person’s end of employment, they should have the chance to tie up any loose ends in the workplace. Here is a quick employment termination checklist the departing employee should complete:
If the departing employee is to be replaced, the new employee should get all the support and training they need to comfortably take over.