Notice Period NSW: What Employers Need To Know

Letting someone go is never easy, but doing it the right way protects your business and your team. In New South Wales (NSW), the rules around “notice period” are primarily set at the national level under the Fair Work Act 2009 (Cth). That means most private sector employers in NSW follow the same notice requirements as other Australian employers, with some nuances depending on awards, enterprise agreements and contracts.

In this guide, we’ll explain what notice period means for NSW employers, when it applies, how to calculate it, and your options if you need someone to finish up sooner. We’ll also walk through practical steps to manage terminations fairly and legally, so you can reduce risk and move forward confidently.

What Is a Notice Period (NSW) And When Does It Apply?

“Notice period” is the minimum time you must give an employee before their employment ends. It lets the employee prepare to leave and gives you time to manage handover and continuity.

For most NSW employers, the minimum notice periods are set by the National Employment Standards (NES) in the Fair Work Act. They depend on the employee’s length of continuous service:

• Less than 1 year: 1 week
• 1 to <3 years: 2 weeks
• 3 to <5 years: 3 weeks
• 5+ years: 4 weeks

Employees aged 45 or over with at least 2 years’ service get an extra week of notice.

These are minimums. If an applicable modern award, enterprise agreement or contract sets a longer period, you must follow the longer one. Many employers choose to set clear notice terms in their Employment Contract for certainty and consistency.

Notice periods do not apply to casual employees, fixed-term contracts that simply expire, or termination for serious misconduct (where employment ends immediately). If you’re weighing up the correct period for a particular scenario, this overview of calculating employee notice periods is a helpful starting point.

How Do Employers Calculate the Notice Period in Practice?

Start by checking three places in this order: the Fair Work Act (NES), any modern award or enterprise agreement covering the role, and the employee’s contract. Use whichever gives the longest notice period.

Then decide whether the employee will work through that period, or whether you’ll end employment earlier and pay out the remainder (called “payment in lieu”). Both options are lawful provided you meet the applicable rules and handle the process fairly.

Common NSW Employer Scenarios

• Redundancy: You still need to provide notice (or pay in lieu) in addition to any redundancy entitlements. Plan the timeline carefully to avoid double counting or shortfalls in final pay.
• Performance or conduct issues (not serious misconduct): If termination is on notice, follow a fair process, confirm the notice period, and decide whether duties are required during notice or whether to place the employee on garden leave.
• Probationary employees: Probation doesn’t remove the NES. If service is under 12 months, the minimum is usually one week (unless a longer period applies under a contract or industrial instrument). For practical guidance, see terminating employment during probation in our employers’ guide.

It’s also common for employers to ask: when does notice start? Generally, it starts the day after you give written notice (for example, via a letter or email) and runs for the required number of consecutive weeks. Public holidays and sick leave can sit within the notice period - notice is about elapsed time, not days actually worked.

Can I Use Payment In Lieu Of Notice?

Yes. If you need a cleaner break, you can pay out the amount the employee would have earned during the notice period instead of having them work it. This is called payment in lieu of notice.

Payment in lieu must cover all the employee’s entitlements they would have received if they had worked through to the end of the period (e.g. ordinary pay, allowances). For a deeper dive on when and how to use it, read our guide to payment in lieu of notice. If you’re unsure how superannuation interacts with a payout, it’s worth checking the specifics in our resource on payment in lieu and superannuation.

What About Garden Leave?

Another option is garden leave. This is where the employee remains employed and paid during their notice period but doesn’t perform work (or only does limited duties). Garden leave helps you protect clients, staff and information while the relationship winds down.

Whether you can direct garden leave depends on the contract terms and the role. It’s a good idea to include an express garden leave clause in your contracts and to handle access, confidentiality and return of property carefully. If you’re weighing up the pros and cons, our overview of garden leave explains how businesses use it in Australia.

Do Employees Have To Give Notice To You?

Often, yes - but it depends on the applicable award, enterprise agreement and the employee’s contract. Many instruments and contracts require employees to give similar notice when resigning.

If an employee doesn’t give the required notice, some awards or contracts allow you to deduct an amount from their final pay up to the value of the notice they failed to give. However, deductions must comply with the Fair Work Act. Only lawful, written-authorised deductions are allowed, and there are strict rules. Before you deduct anything, make sure it fits within section 324 of the Fair Work Act.

What Must Be Paid On Termination In NSW?

Regardless of whether notice is worked out or paid in lieu, you’ll need to calculate the employee’s final pay. This often includes:

• Outstanding wages (including ordinary hours up to the end date)
• Accrued but untaken annual leave (plus any applicable leave loading)
• Notice pay (worked or paid in lieu)
• Redundancy pay (if applicable)
• Any other entitlements under the relevant award/EA or contract

Some employers also ask whether they can require employees to take annual leave during the notice period. The short answer: only in limited circumstances, such as if an award or enterprise agreement allows it, or if the direction is reasonable (e.g., a close-down). The safer path is to check your instrument and contract first - our short guide on whether employers can require employees to take annual leave outlines the general rules.

Step-By-Step: Managing Notice And Ending Employment Fairly

Getting the process right matters. Here’s a practical sequence many NSW employers follow.

1) Confirm the Legal Basis

Be clear on why employment is ending (e.g., redundancy restructure, performance after a fair process, mutual agreement). Your reason impacts both the process and entitlements.

2) Check the Notice Period

Identify the longest applicable notice period by checking the NES, the relevant award/EA, and the contract. If the employee is over 45 with 2+ years service, remember the extra week.

3) Decide: Work Out Notice, Garden Leave, Or Payment In Lieu

Think about business continuity, client and IP protection, and team dynamics. If you need to end employment immediately, calculate and pay the correct amount in lieu (and document it). If you prefer the employee to remain employed but not active, consider garden leave if your contract supports it.

4) Prepare Clear Documentation

Issue a written notice letter that sets out the end date, the notice arrangement, and the plan for handover and return of property. If there are post-employment obligations (confidentiality, return of IP, restraint of trade), reference where these live in the contract. If your contracts don’t currently cover these, it’s a good moment to update your template Employment Contract for future hires.

5) Calculate Final Pay Accurately

Include all entitlements and ensure any deductions are lawful and properly authorised. Where you’re paying in lieu, confirm the correct gross amount and timing. If redundancy is involved, map out notice and redundancy separately.

6) Manage Access And Handover

Plan for knowledge transfer, return of devices and keys, and revoking system access. If you keep the employee working during notice, structure the handover to protect clients and sensitive information.

7) Close Out Respectfully

It’s always best practice to handle communications with care. A respectful process reduces legal risk, supports morale, and protects your brand. Where appropriate, a brief exit meeting and a written confirmation of obligations can help avoid confusion later.

NSW Nuances Employers Often Ask About

Does NSW Law Change My Federal Notice Obligations?

For most private sector businesses, the NES in the Fair Work Act sets the baseline for notice in NSW. State law may be more relevant to other entitlements (for example, long service leave) or public sector employment. If you operate in unique or highly regulated industries, check for any sector-specific requirements too.

What If An Award Requires Employees To Give Notice?

Many modern awards require employees to give notice when resigning. If they don’t, you may be allowed to withhold up to one week’s wages (depending on the award) from their final pay - as long as you follow the Fair Work Act’s rules on lawful deductions. Always confirm the instrument and keep good records.

What About Notice During Probation?

Probation does not remove the NES. Typically, if probation is within the first 12 months, the minimum notice is one week unless a longer period applies. Review your probation clause and be mindful of a fair process, particularly if performance or conduct is involved. For practical steps, see our guide on terminating during probation.

Can I Restrict Post-Employment Activities During Notice?

Yes, to a point. You can use garden leave to limit day-to-day work and access during notice. After employment ends, enforceable restraint and confidentiality clauses (if properly drafted) can protect your business interests. If those clauses aren’t yet in your contracts, consider updating your templates so future hires have clear, enforceable obligations from day one.

Prevention Is Better Than Cure: Set Your Contracts Up Well

Clear, modern contracts make notice periods easy to manage. They also help prevent disputes about timing, pay and post-employment obligations. At a minimum, your contracts should cover:

• Notice period lengths and the right to direct payment in lieu
• Garden leave (including directions during notice)
• Confidentiality and IP ownership during and after employment
• Return of property and cooperation with handover
• Restraint of trade (if appropriate for the role)
• Interaction with any award or enterprise agreement

If you’re planning a refresh, align your template Employment Contract with your award/EA obligations and your actual business practices. Doing this before an issue arises saves time and reduces risk.

Quick Answers To Other Notice Issues Employers Face

Can We Make Someone Take Leave During Notice?

Sometimes, but only if allowed under the award/EA or if the direction is reasonable in the circumstances (e.g., a Christmas close-down). Otherwise, avoid forcing annual leave. Our short resource on employers requiring annual leave explains the boundaries.

What If We Need Them To Finish Today?

Consider payment in lieu of notice so the termination date is immediate but the employee receives the value of the notice period. Ensure your payout calculations are correct - our guide to payment in lieu of notice covers the essentials.

Is Super Payable On Notice Payouts?

It depends on what the payment covers. The superannuation treatment can vary based on whether the amount reflects ordinary time earnings. Check the rules specific to your situation in our piece on payment in lieu and superannuation, or get tailored advice.

Can We Deduct Pay If An Employee Doesn’t Give Resignation Notice?

Only if an award/EA or the contract allows it and the deduction is lawful under the Fair Work Act. Review the limits under section 324 before making any deductions.

Key Takeaways

• In NSW, minimum notice periods come from the National Employment Standards and depend on service length; awards/agreements or contracts can set longer periods.
• Employers can require employees to work through notice, place them on garden leave, or pay in lieu - choose the option that best protects your business and document it clearly.
• Calculate notice by checking the NES, the relevant award/EA and the contract, then apply the longest applicable period and pay all final entitlements on time.
• If employees resign without giving required notice, deductions from final pay are only permissible if allowed by the instrument/contract and lawful under section 324.
• Well-drafted contracts make notice simple to manage and help protect clients, IP and confidential information during transitions.
• For probationary employees, the NES still applies - usually one week’s notice unless a longer period is specified by an instrument or contract.

If you’d like a consultation about notice period obligations in NSW and how to structure your employment contracts and processes, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.