When an employee exits an organisation for any reason, if an employer misunderstands the payment of notice obligations, they risk compliance breaches; potentially resulting in costly financial or legal disputes and reputational damage to the organisation.
Employers must understand their contractual and statutory obligations, which may derive from the employment contract, the National Employment Standards (NES), the Award and/or the Enterprise Agreement – or a combination of these.
In many employment relationships, notice obligations are often managed in one of two ways. The employee may work through the notice period, potentially providing an opportunity for handover and knowledge transfer. Alternatively, the employer may elect to finish the employee immediately, in which case they should pay the employee in lieu of notice the amount that they would have earned during this period.
It can become complex if an employee resigns with immediate effect despite having a contractual minimum notice period. In such circumstances, the employer should carefully review the terms and applicable industrial instruments. It may be possible for the employer to deduct wages from the employee if they breach the contract terms but this must be closely assessed to ensure it is a lawful deduction.
Another element of complexity involves continuity of service, as this impacts on the applicable notice period, and possible redundancy entitlements. Service continuity may include periods of certain approved leave, periods of subcontracting or secondment, or transfer between entities.
If an employee is made redundant, the award or agreement may stipulate terms to provide the employee with a job-search entitlement. Don’t forget the additional one week notice period if an employee over the age of 45 is terminated by the employer.
Clear employment contacts and well-defined exit policies and procedures are the key to managing departures fairly, accurately and professionally. Manage your employee exits respectfully as these influence and impact upon your organisational culture.