Managing staff transitions is part of running any Australian business. Whether you’re responding to a resignation or planning a restructure, understanding how to calculate notice periods keeps you compliant and helps you part ways respectfully.
We also know employment law can feel complicated when you’re busy. The good news is that with a clear process, you can work out the correct notice period every time and avoid the common pitfalls that lead to disputes.
In this guide, we’ll explain what notice periods are, how to calculate them step-by-step, when notice does and doesn’t apply, and the practical issues to watch during the notice period. We’ll also highlight the key documents that protect your business as you grow.
What Is a Notice Period and Why It Matters
A notice period is the minimum amount of time an employee or an employer must give before ending employment. In Australia, notice periods give both sides time to prepare for the change-hand over work, secure a replacement, and finalise payroll and access.
Your obligations can come from three places:
- National Employment Standards (NES) under the Fair Work Act 2009
- Any applicable modern award or enterprise agreement
- The terms in the employee’s contract
Failing to give the correct notice-or the right amount of pay in lieu-can create compliance risks and fuel unfair dismissal or underpayment claims. Clear processes and well-drafted Employment Contracts go a long way to preventing issues.
How To Calculate Notice Periods Step-By-Step
1) Identify the Source of the Notice Period
Start by confirming where the notice requirement comes from. In most cases, the NES sets the minimum weeks of notice. An applicable modern award, enterprise agreement, or the employee’s contract may set a longer period-but they can’t go below the NES minimum.
If your contract promises more generous notice than the NES, you need to honour the contract.
2) Work Out the Employee’s Continuous Service
Notice under the NES is based on the employee’s period of continuous service with you. As a general rule, periods that don’t count as service under the Fair Work Act aren’t included (for example, some unpaid leave). Importantly, time worked as a casual does not count towards continuous service for notice and redundancy purposes. Only service as a permanent employee (full-time or part-time) counts unless an award or agreement expressly provides otherwise.
3) Apply the NES Minimum Notice Table
For most permanent employees, the NES requires at least:
- Less than 1 year of service: 1 week’s notice
- 1 to 3 years of service: 2 weeks’ notice
- 3 to 5 years of service: 3 weeks’ notice
- More than 5 years of service: 4 weeks’ notice
Where the employer is giving notice of termination, an additional week applies if the employee is at least 45 years old and has completed at least 2 years of continuous service. This extra week does not apply when an employee resigns.
4) Check Any Award or Agreement
Some industries are covered by awards or enterprise agreements that set specific notice requirements (again, they cannot reduce the NES minimum). Review the relevant instrument-your Modern Awards obligations should align with what’s in your contract and HR processes.
5) Confirm the Contract Position
Many contracts specify a longer or fixed notice period. Follow the most beneficial rule for the employee between the NES/award and the contract. A clause that undercuts the NES or an award won’t be enforceable.
6) Decide Whether Notice Will Be Worked or Paid
You can usually require the employee to work their notice, or you can end employment sooner and make a payment in lieu of notice if your contract or the award allows for it. If paying in lieu, you must pay what the employee would have earned during the notice period (at their full rate and including applicable allowances), and you should confirm this in writing.
When Notice Applies - And When It Doesn’t
In most cases, notice is required for permanent employees when either party ends employment. However, there are exceptions:
- Serious misconduct: No notice is required if you dismiss an employee for serious misconduct (for example, theft or violence). The threshold is high-investigate properly and document your findings before acting.
- Casual employees: Casuals generally have no entitlement to notice on termination, unless their award, agreement or contract says otherwise.
- End of a fixed-term contract: If a genuine fixed-term ends on its specified date, notice is typically not required unless the contract provides for it.
Redundancy is a special case. The notice period is calculated the same way as any employer-initiated termination, but employees may also be entitled to redundancy pay. If you’re planning redundancies, use a consistent process and double-check entitlements-our guide to how to calculate redundancy pay is a helpful starting point.
Resignations vs Terminations: Your Obligations
If the Employee Resigns
Employees usually need to give notice in line with their award or contract. If they offer less than the required notice, your options will depend on the award or contract and the Fair Work Act’s rules on deductions.
Some awards allow an employer to withhold an amount (often capped at up to one week’s wages) if an employee doesn’t give the required notice. This is not universal. Any deduction must be authorised under the award or agreement, or meet the requirements of the Fair Work Act (see section 324). Before deducting, check the award/contract carefully and consider seeking advice.
For practical guidance on responding when staff won’t work out their notice, see our overview on an employee not working their notice period.
If You Terminate Employment
Where termination is employer‑initiated (and not for serious misconduct), you must provide the correct notice or pay in lieu. Communicate the decision in writing, confirm the notice period, and set the last day of employment. A consistent process-supported by your policies and templates-reduces the risk of disputes.
Make sure payroll is ready to calculate the final pay correctly. This typically includes outstanding wages, accumulated leave entitlements that are payable, and any payment in lieu of notice, where relevant. Our practical guide to calculating final pay outlines key steps and timing.
Managing the Notice Period in Practice
Communicating Notice (Letters and Records)
Provide a clear written letter confirming the notice period, the final day of employment, and whether the notice will be worked or paid out. Date the letter and keep a copy on file. Good record‑keeping is your best defence if questions arise later.
Probation Periods
Many contracts specify a shorter notice period during probation (for example, one week), provided it is at or above any relevant award requirement. After probation, the standard notice rules apply. For more context around ending employment early, see our guide to terminating employment during probation.
Working Through Notice vs Garden Leave
Depending on your contract, you can require an employee to work through their notice, or place them on garden leave so they remain employed and paid but don’t attend work. Garden leave can protect client relationships, confidential information and team stability during transitions-just ensure your contract permits it.
Part-Time and Casual Employees
- Part-time employees: The notice entitlement is the same number of weeks as for a full‑timer with the same service. Their pay during the notice period will reflect their normal part-time hours.
- Casual employees: Casuals generally do not receive notice or pay in lieu on termination, unless an award, agreement or contract specifically provides it. Also note that prior casual service does not count toward continuous service for notice or redundancy.
Sick Leave, Annual Leave and Other Absences During Notice
Employees can usually take accrued paid leave during a worked notice period in line with your policies and any applicable award. Sick leave during notice should be handled consistently and in line with your usual evidence requirements-our guide to sick leave during an employee’s notice period covers key points.
Can You Deduct Wages If an Employee Doesn’t Give Notice?
Only in limited circumstances. A deduction must be authorised by an award or enterprise agreement, authorised in writing and compliant with the Fair Work Act, or required by law. Many (but not all) awards allow a deduction up to a certain cap where an employee fails to give required notice. Others don’t allow deductions at all. Always check the instrument that applies and the rules in section 324 of the Fair Work Act before acting.
Final Payroll, Access and Handover
Plan for a smooth handover, remove system access at the right time, collect company property, and issue the final pay on time. A short checklist and clear ownership of tasks (HR, payroll, IT, manager) helps avoid missed steps.
Key Takeaways
- Start with the NES, then check any applicable award or agreement and the employee’s contract-the longest valid notice period applies.
- NES notice is based on continuous service and applies to permanent staff; prior casual service does not count towards notice or redundancy entitlements.
- The extra one week of notice for employees aged 45+ with 2+ years’ service only applies when the employer gives notice, not when an employee resigns.
- You can generally require notice to be worked or make a lawful payment in lieu of notice if permitted by the contract or instrument-confirm the amount in writing.
- Deductions for insufficient employee notice are not automatic-what’s allowed varies by award or agreement and must comply with section 324.
- Use strong foundations: clear Employment Contracts, consistent processes for terminations and resignations, and accurate final pay calculations backed by records.
If you’d like a consultation on calculating notice periods or updating your employment contracts and processes, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
