When an employee resigns, it can feel like everything needs to happen at once - updating rosters, handing over clients, protecting confidential information, and making sure payroll is correct.
But one of the most important (and commonly misunderstood) parts of the process is the employee’s notice of resignation (also called the notice period).
As a small business owner, you want to handle resignations smoothly and professionally. Done well, it protects your operations, reduces the risk of disputes, and helps you keep good relationships (including with the rest of your team).
In this guide, we’ll walk you through what a notice of resignation actually means in Australia, how to work out the correct notice period, what to do if you want an employee to finish earlier (or later), and the key legal and practical steps to follow from resignation through to final pay.
What Is A “Notice Of Resignation” (And Why Does It Matter)?
A notice of resignation is the period of time between when an employee gives you their resignation and when their employment ends.
In most cases, the employee continues working during this time (unless you agree otherwise). This notice period matters because it:
- gives you time to plan coverage, recruit, and manage handover;
- helps avoid sudden disruption to customers and internal workflows;
- sets clear expectations about the employee’s last day;
- affects what you need to pay in their final pay (including whether any deductions are lawful); and
- reduces the risk of confusion or disagreement after the resignation.
In Australia, an employee’s resignation notice period usually comes from one (or more) of the following:
- a modern award that applies to the employee (many awards set resignation notice rules);
- an enterprise agreement (if you have one); and/or
- the employee’s employment contract (often setting notice requirements, especially for senior roles).
While the Fair Work Act 2009 (Cth) and the National Employment Standards (NES) set minimum standards for employers (including notice of termination by an employer), they don’t generally set a standalone “minimum resignation notice” that employees must give in all cases. Practically, this means you’ll usually be looking to the award, agreement and/or contract when confirming resignation notice.
Where there’s overlap, you’ll generally apply the rule that complies with any binding industrial instrument and doesn’t undercut employee entitlements.
How Much Notice Of Resignation Should You Require?
There isn’t one single notice period that fits every business. The correct notice of resignation depends on:
- whether the employee is award-covered;
- their classification and role;
- whether they are full-time, part-time, or casual;
- what the employment contract says; and
- whether there are any special circumstances affecting the exit (for example, disputes about conduct or capacity - although those issues more commonly arise in employer-led terminations).
If you want a practical starting point, it often helps to confirm (1) whether an award or enterprise agreement applies, then (2) check the contract, and then (3) document the agreed last day in writing.
Check The Award Or Agreement First (Often The Biggest Driver)
Many modern awards include a clause on resignation notice, and it can differ depending on classification and length of service.
If you’re not sure whether an award applies, it’s worth confirming early - this affects not only resignation notice, but pay rates, penalties, leave loading, and rostering conditions.
Then Check The Employment Contract
Your employment contract can set a resignation notice period (for example, two weeks, four weeks, or longer for senior employees). This is one reason having a well-drafted Employment Contract in place matters - it removes guesswork and helps you enforce a consistent process.
Just keep in mind that a contract term can’t undercut minimum entitlements in an award or enterprise agreement (and must otherwise comply with employment laws).
What About Casual Employees?
Casual employment can be trickier, because casuals don’t have “ongoing guaranteed hours” in the same way as permanent staff. Some awards still set notice expectations for casual employees, while in other cases the arrangement may allow either party to end employment with minimal notice.
If you regularly roster casuals on an ongoing basis, make sure your approach to resignation notice lines up with the award and your rostering practices - and aim to apply a consistent, reasonable process.
Probation Period Resignations
Resignations during probation are common, especially where the role isn’t the right fit. Notice periods during probation may be shorter depending on the contract and any applicable award.
If you need to assess what rules apply during probation (including if you’re considering ending employment rather than accepting a resignation), it’s worth checking your approach against guidance on probation.
Step-By-Step: How To Handle A Resignation Professionally (And Reduce Risk)
Once you receive a resignation, it helps to follow a consistent process. This keeps the situation calm, protects your business, and helps you meet your obligations.
1) Get The Resignation In Writing (Even If It Was Said Verbally)
An employee might resign in a meeting, on the phone, or casually at the end of a shift. Even if it’s clear what they mean, you should ask for confirmation in writing (email is usually fine).
This helps avoid later disputes about whether they resigned, and what their intended last day was.
2) Confirm The Last Day Of Employment In Writing
Reply to the resignation confirming:
- you’ve received their resignation;
- their notice period (and how it was worked out, for example by reference to the award, agreement or contract);
- their last working day (and last day of employment, if different);
- handover expectations; and
- any next steps (final pay timing, return of property, exit interview, etc.).
This is a simple step, but it’s one of the best ways to keep the resignation notice period clean and well-managed.
3) Plan The Handover Early
In a small business, one resignation can create a real operational gap. Use the notice period strategically by planning:
- transfer of client accounts and passwords;
- status of current projects and deadlines;
- training for whoever is covering the role (even temporarily); and
- documentation of key processes.
If the employee is in a sales or relationship role, think about how you’ll communicate to customers or stakeholders in a way that supports continuity.
4) Confirm Access, Security, And Confidentiality
Resignations can raise practical risks: customer lists walking out the door, access to systems lingering after the last day, or confidential files being copied.
During the notice period, consider:
- reminding the employee of confidentiality obligations (often in the contract);
- checking what devices and accounts they have access to;
- planning to deactivate access on their final day; and
- confirming return of laptops, keys, uniforms, and security passes.
If you have restraints of trade or non-solicitation clauses, treat them carefully - enforceability depends on how they’re drafted and the employee’s role.
5) Prepare Final Pay Early (So You’re Not Rushed Later)
Final pay errors are one of the most common causes of post-resignation disputes. As soon as the resignation is confirmed, start preparing the employee’s final pay calculations so you can pay correctly and on time.
For most businesses, this includes checking outstanding:
- wages up to the last day worked;
- unused annual leave and any applicable leave loading;
- accrued entitlements under an award or agreement; and
- any lawful deductions (only where permitted and properly authorised).
If you want a structured approach to this, the guidance on final pay is a helpful reference point.
Can You Reduce Or Waive The Notice Period After A Resignation?
Sometimes you don’t want the employee to work out their full notice period - for example, if they’re going to a competitor, or there’s already a breakdown in the working relationship.
In those cases, you have a few options, but you should handle them carefully (because bringing the end date forward can change the legal character of what’s happening).
Option 1: Mutual Agreement To Finish Early
The simplest approach is agreeing with the employee to an earlier end date.
Put it in writing, and be clear about:
- the new last day;
- whether the employee will be paid for any part of the notice period they won’t work; and
- how handover and return of property will work.
Option 2: Pay The Notice Period Out (Where Required)
If you direct the employee not to work out some (or all) of their notice period, you may need to pay them for the portion you’re not requiring them to work - depending on what the contract says and/or what an award or enterprise agreement requires.
This is often referred to as payment in lieu of notice. It’s most commonly discussed when an employer terminates employment, but it can also come up where an employer effectively brings forward the end date after a resignation (rather than simply accepting the employee’s proposed last day).
If you’re considering this approach, make sure you understand how payment in lieu of notice works and what should be included.
Option 3: Garden Leave (If Your Contract Allows It)
Some contracts allow you to place an employee on “garden leave”, meaning they remain employed and paid through the notice period, but they don’t perform work and don’t access your systems.
This can help protect confidential information while still meeting payment obligations - but it needs to be handled properly and ideally be supported by a well-drafted contract clause.
What If The Employee Doesn’t Give The Required Notice?
This can happen, especially if the employee has another job lined up and wants to leave immediately.
What you can do will depend on the contract, any award coverage, and whether deductions are permitted. In general:
- you should avoid making deductions from final pay unless you’re confident it’s lawful and properly authorised (for example, some awards or written agreements may permit a deduction where notice isn’t worked, but it must be handled carefully);
- you can document that the employee didn’t work the required notice period; and
- you may be able to pursue a claim for losses in some circumstances, but this is often not commercially practical for small businesses.
Often, the most practical solution is to focus on a clean separation and tighten your systems for the next hire (clearer contracts, better handover processes, and stronger workplace policies).
What Should Be Included In Final Pay When An Employee Resigns?
Even when an employee resigns on good terms, final pay is where things can become contentious - especially if there’s confusion about leave, notice, or deductions.
Unused Annual Leave (And Leave Loading)
In most resignations, employees are paid out unused annual leave. Depending on the award, agreement, and your usual practice, annual leave loading may apply too.
It’s worth checking your obligations around annual leave on resignation so you know what should be paid out and when.
Other Entitlements
Depending on the employment conditions, final pay might also involve:
- accrued time off in lieu (TOIL) balances;
- shift penalties that haven’t yet been processed;
- allowances; and
- commission or bonuses (depending on the contract and applicable policies).
Be careful with bonuses and commissions - your contract and any written incentive plan should be clear about eligibility when an employee is serving a notice period or leaving the business.
Can You Withhold Final Pay If They Haven’t Returned Property?
This is a common question for employers, especially where uniforms, phones, laptops, or tools haven’t been returned.
In most cases, you can’t simply “hold” an employee’s wages indefinitely because company property hasn’t been returned. Deductions and set-offs are tightly regulated, and wages generally need to be paid when due.
A safer approach is to:
- document the property outstanding and request its return by a specific date;
- arrange a collection time or courier return;
- deactivate system access immediately on the last day; and
- only make deductions where you have a clear legal basis to do so (and the deduction is properly authorised).
If you want to reduce this risk in future, employment contracts and workplace policies should set out expectations around property, deductions (where lawful), and end-of-employment processes.
What Legal Documents Help You Manage Resignations Better?
A resignation might feel like a “people issue”, but good documentation is what keeps it from turning into a legal and operational headache.
Here are the documents that typically make notice periods and resignation processes much easier to manage.
- Employment Contract: Your first line of defence. It should clearly set resignation notice periods, confidentiality expectations, and the basic rules of the employment relationship. A tailored Employment Contract can also support garden leave clauses and post-employment restraints (where appropriate).
- Workplace Policies / Staff Handbook: Helps set consistent processes for resignations, handover, return of property, and IT access. This is especially useful when you have multiple managers handling exits across the business.
- Confidentiality / IP Clauses: Often built into the contract, these help protect trade secrets, customer data, and business know-how. They’re particularly important when an employee resigns to join a competitor or start their own venture.
- Clear Payroll And Leave Records: Not a “legal document” in the contract sense, but critical evidence if there’s ever a dispute about final pay or entitlements. This is where businesses often get caught off guard if records are incomplete.
- Exit Checklist: A simple internal checklist can make resignations repeatable and low-stress. Include system access, handover deliverables, property return, and confirmation of final pay items.
If you’re frequently dealing with staff turnover, putting these foundations in place can reduce disruption each time a resignation happens - and make notice periods far easier to manage.
Key Takeaways
- Notice of resignation is the period between the employee resigning and their employment ending, and it should be confirmed in writing as early as possible.
- The correct notice period will usually come from an award, enterprise agreement and/or the employment contract - so it’s worth checking each layer before confirming the last day.
- A consistent resignation process helps you manage handover, protect confidential information, and reduce the risk of disputes about the final day or final pay.
- If you want an employee to finish earlier than their notice period, consider a mutual agreement, garden leave (if supported by the contract), or paying out the notice period where required.
- Final pay often includes wages to the last day worked and unused annual leave (and possibly leave loading), and it’s best to prepare calculations early to avoid errors.
- Well-drafted employment contracts and clear workplace policies make resignations smoother, more consistent, and easier to manage as your team grows.
This article is general information only and doesn’t constitute legal advice. For advice tailored to your business and your situation, get in touch with a lawyer.
If you’d like help setting up your employment documents or managing a resignation the right way, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
