Resignation

Resignation & Notice

Resignation is the termination of employment initiated by the employee. That is, the employee voluntarily decides to end their employment and clearly communicates that decision to the employer.

When an employee resigns, they may have to give written notice via a letter (or email) to their employer.

The notice period:

• Starts the day after the employee gives their employer notice in writing via email or a letter that they want to end their employment

• Ends on the last day of employment

If the employer pays out the notice period, the employee’s employment ends on the date that payment in lieu of notice is made. In that case, the employee doesn’t stay employed during the notice period (or continue to accrue entitlements, such as annual leave). If the employer doesn’t pay out any part of the notice period, the employee stays employed for the entire notice period. Employment can’t end on a date earlier than the day the notice is given.

An employee’s award, employment contract, enterprise agreement or other registered agreement sets out:

• How much notice (if any) the employee has to give when they resign

• When an employer can withhold money if the employee does not give the minimum notice period

Taking money out of an employee’s pay before it is paid to them is called a deduction.

An employer can only deduct money if:

• The employee agrees in writing and it’s principally for their benefit;

• It’s allowed by a law, a court order, or by the Fair Work Commission; or 

• It’s allowed under the employee’s award; or

• It’s allowed under the employee’s registered agreement and the employee agrees to it.

Most awards say that in certain circumstances an employer can deduct up to one week’s wages from an employee’s pay if they do not provide the minimum amount of notice. Where an award allows this, an employer can only deduct pay from an employee’s wages under the award, not from other entitlements.

Even if the deduction is made in accordance with an award, registered agreement or contract, an employer can’t deduct if:

• It benefits the employer, not the employee, and the deduction would be unreasonable in the circumstances; or

• The employee is under 18 years of age and their parent or guardian hasn’t agreed in writing.

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Notice Required When Resigning

An employee can give more notice than what is outlined in the applicable award, registered agreement or contract. If the employer does not want the employee to work the notice period, or wishes to shorten the notice period, they would need to reach a mutual agreement with the employee to the shorter notice including waiving notice. Employer cannot unilaterally substitute the proposed notice period by employee for a shorter one, even if it’s according to the award or employment contract. In doing so, it constitutes to the employer terminate the contract and therefore would have unfair dismissal risks attached.

Calculating Final Payments

Final pay is what an employer owes an employee when their employment ends. An award, employment contract, enterprise agreement or other registered agreements can specify when the final payment must be made. If it does not, the best practice is for an employee to be paid within 7 days of their employment ending, or on the next scheduled pay day.

An employee should get the following entitlements in their final payment:

• All outstanding wages for hours worked, including penalty rates and allowances

• Any accumulated annual leave

and, if applicable:

• Annual leave loading – ie. if it would have been paid during employment;

• Accrued or pro rata long service leave – depending on the relevant state or territory legislation;

• Redundancy pay;

• Payment in lieu of notice – if the employee is not working the notice period.

Sick or carer’s leave is generally not paid out when employment ends, unless an award, contract or registered agreement says otherwise.

The Resignation Process

When an employee resigns, there are many things you need to do. You will need that employee to finish up some of their work, and hand work over, or train their replacement.

On or before the employee’s final date of employment, you can request the employee to:

• Return all property of the business (including keys, documents, information technology equipment, intellectual property);

• Return or be reimbursed with outstanding petty cash;

• Remove hard copy and electronic personal and confidential files;

• Inform supervisor/s of any passwords/codes to access computer files.

Updating the Employee’s Employment Records

The employee’s resignation letter should be stored in the employee’s personnel file. As part of the record-keeping requirements under the Fair Work Act 2009 the file should contain details of the notice period, and in what circumstances the employment ended. This file should remain private and confidential.  Generally, no one can access these records other than the employee, their employer, and relevant payroll staff. If requested by the employee, or the former employee to whom the record relates, or the Fair Work Ombudsman, employers must make copies of these records available.

Contact Employsure today on 1300 651 415 to learn more about resignation policies, entitlements and the calculating correct final payments.