Hiring and retaining good people is central to running a successful business. At some point though, team members move on - whether you’re ending employment, restructuring, or someone resigns to take the next step in their career.
Understanding how employment notice periods work helps you stay compliant, plan resourcing, and finish the relationship on a fair and professional note. It also reduces the risk of disputes about final pay, entitlements and timing.
In this guide, we’ll break down the minimum legal requirements, how contractual notice interacts with the law, when notice starts, whether it needs to be worked, and how to manage special cases like probation, casuals, redundancy and serious misconduct. We’ll also share practical tips to manage notice periods smoothly.
What Is An Employment Notice Period?
A notice period is the amount of time given by either party before employment ends. It allows both sides to prepare for the change - you can plan handover and cover, while the employee wraps up work and gets ready for their next role.
Notice is relevant when:
- An employer terminates employment (other than for serious misconduct)
- An employee resigns
- A redundancy or restructure results in a role ending
For employer-initiated terminations, the Fair Work Act 2009 requires notice to be given in writing. For employee resignations, the notice requirement usually comes from the employment contract or any applicable modern award or enterprise agreement.
Two sources set the rules:
- Statutory minimums under the National Employment Standards (NES)
- Contractual notice in the employee’s agreement (and terms in any award or enterprise agreement)
Minimum Notice Periods Under The NES
The NES sets out the minimum notice an employer must give when ending employment (other than for serious misconduct). Minimum notice depends on continuous service:
- Less than 1 year: 1 week
- 1 – 3 years: 2 weeks
- 3 – 5 years: 3 weeks
- More than 5 years: 4 weeks
Employees aged 45+ with at least two years of continuous service get an extra week of notice.
A few practical points to keep you on track:
- Written notice: Employers must provide written notice (letter or email). The notice period starts the day after the employee receives it.
- Calendar days: Notice runs in calendar days, not business days. Weekends, public holidays and paid leave fall within the notice period.
- Longer periods apply: If a contract, award or enterprise agreement provides more generous notice, the longer period will apply.
If you’re mapping out notice requirements across your workforce, a quick refresher on how to approach it is in this guide to calculating employee notice periods.
Employee Resignations And Contractual Notice
When an employee resigns, their required notice usually comes from the employment contract and any applicable award or enterprise agreement.
Commonly, contracts require two to four weeks’ notice for ongoing employees, regardless of length of service. That’s lawful so long as it’s reasonable and not inconsistent with an award or agreement.
What if an employee doesn’t give enough notice?
Be careful here. Wage deductions are tightly regulated by the Fair Work Act. A deduction for insufficient notice is only lawful if it’s permitted by an applicable award or enterprise agreement, or the employee gives a valid written authorisation that complies with the Act, and the deduction doesn’t reduce pay below minimum entitlements.
Key points to remember:
- Many modern awards allow an employer to deduct up to one week’s wages if a resigning employee fails to give the required notice - but the exact rule depends on the award’s terms.
- Deductions must comply with the Fair Work Act’s rules on lawful deductions and cannot undercut minimum rates or entitlements.
- Accrued annual leave must still be paid out according to the law. You can’t “withhold” it unless permitted by an award or agreement.
The safest approach is to check the contract and any award or enterprise agreement first, then take advice before making any deduction. If a deduction isn’t permitted, you can still discuss a mutually agreed earlier end date.
If you’re issuing or updating contracts, make sure your templates set out a clear notice clause. If you need a starting point for staff on ongoing hours, consider putting robust terms in an Employment Contract for full-time and part-time employees.
Working, Paying Or Waiving Notice
Once notice is on foot, the default position is that the employee continues working during the period on their usual pay and conditions. In practice, there are a few options.
1) Work out the notice period
The employee keeps performing their role and is paid as normal. You can use this time for handover, knowledge transfer and client introductions.
2) Payment in lieu of notice (PILON)
Instead of requiring the employee to work the notice period, you can choose to pay an equivalent amount and end employment immediately. The payment must reflect the full value of the notice - including what the employee would have earned had they worked it out, such as loadings and allowances ordinarily payable.
Superannuation on PILON can be tricky and depends on whether the payment counts as ordinary time earnings. If you’re considering PILON, it’s worth reviewing the basics here: payment in lieu of notice.
3) Garden leave
Some contracts allow you to direct an employee not to attend work during notice while continuing to pay them. This can help protect client relationships, confidential information and team dynamics. If you need a refresher on how it works, see this overview of garden leave.
4) Shortening or waiving notice
Notice can be reduced or waived by mutual agreement. If both parties agree to bring the end date forward, put it in writing and confirm any impact on final pay.
When exactly does notice start?
- The clock starts the day after notice is given/received. If you email a termination letter on Monday and it’s received that day, day one is Tuesday.
- Public holidays and paid leave (including personal/carer’s leave and annual leave) count within notice unless your contract or award says otherwise.
- If notice is posted, it generally takes effect when received (not when sent).
Special Scenarios To Watch (Probation, Casuals, Redundancy, Misconduct)
Probationary periods
Probation does not remove the obligation to give notice. Many contracts set a shorter contractual notice (e.g. one week) during probation, which is fine if it’s at least the NES minimum that applies at the time. If you’re formalising procedures for early stage exits, it’s helpful to understand the process in this guide on terminating employment during probation.
Casual employees
Genuine casuals are excluded from the NES notice entitlements for employer termination. However, an applicable award or the casual’s contract may require some notice, so always check those documents. Note: employees who have been offered and accepted conversion to permanent employment are no longer casual for these purposes.
Redundancy
Where a role is genuinely redundant, you still need to give notice (or payment in lieu) in line with the NES or contract. Redundancy pay may also be owed depending on headcount and service length, separate from notice. To plan your obligations, see how to approach redundancy payment calculations.
Serious misconduct
For serious misconduct (for example, theft, fraud, or violence), employment can end without notice. You must still pay for time worked and statutory entitlements like accrued annual leave on termination. Serious misconduct should be carefully assessed and well-documented; consider an investigation and provide the employee with an opportunity to respond.
Unfair dismissal and small business considerations
Notice is only one part of a fair termination process. An employee’s eligibility to bring an unfair dismissal claim depends on service length and business size:
- Small businesses (fewer than 15 employees): minimum employment period is 12 months and the Small Business Fair Dismissal Code applies.
- Larger businesses: minimum employment period is 6 months.
Even where notice is given, ensure your reasons and process are sound. If you’re unsure, speaking with an employment lawyer before issuing notice can save time and risk later.
Frequently asked questions in these scenarios
Can an employee take leave during notice? Yes, if annual leave is approved or the employee is genuinely unwell and provides evidence for personal/carer’s leave. Approved leave doesn’t pause the notice period unless your contract or award says otherwise.
Does notice have to be the same for employer and employee? Not necessarily. Contracts often set different obligations for each party, so long as legal minimums are respected and no award or agreement is breached.
What documents should I issue when ending employment? At a minimum, provide written notice (or PILON confirmation), a termination letter confirming the end date and entitlements, and a clear final payslip showing all components. Follow any award or agreement steps that apply.
Key Takeaways
- For employer-initiated terminations (other than for serious misconduct), the NES requires written notice and sets minimum periods by length of service; if a contract, award or enterprise agreement is more generous, the longer period applies.
- When employees resign, notice usually comes from the contract and any applicable award or agreement. Deductions for insufficient notice are only lawful if permitted by an award or the Fair Work Act’s deduction rules with valid written authorisation.
- Notice runs in calendar days and includes weekends, public holidays and approved leave. You can have the employee work the period, place them on garden leave, or make payment in lieu of notice.
- Special scenarios need care: probation still requires notice, genuine casuals are excluded from NES notice, redundancies require both notice and (often) redundancy pay, and serious misconduct can justify termination without notice.
- Process matters. Eligibility for unfair dismissal depends on business size and service length - 12 months for small businesses and 6 months otherwise - so ensure your reasons and procedure are sound.
- Well-drafted agreements and consistent processes make notice periods easier to manage. If you’re updating templates or planning a transition, structured documents like an Employment Contract and a clear termination letter help avoid disputes.
If you’d like a consultation on managing employment notice periods or reviewing your employment contracts, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
