Deciding to leave a job is a big step. Most people think about the new role first and the paperwork second. Yet the way you resign can change how much you are paid on the way out. A little planning helps you leave on good terms and with the right money in your account.
In Australia the rules about notice and final pay come from a few places. Your award, enterprise agreement or employment contract usually sets the details. The Fair Work Ombudsman publishes plain guidance on how these rules work. This post covers the main points in general terms.
How to resign
You can resign verbally or in writing. The Fair Work Ombudsman says written notice is best practice. Your letter or email should state your last day of work. Keeping a copy gives you a clear record if any question comes up later.
Your employer cannot accept or reject a resignation. It is your decision to end the employment. Even so, it is good practice for the employer to acknowledge it. That reply is often the start of a conversation about how the notice period will run.
How much notice you need to give
The amount of notice you must give is set by your award, enterprise agreement, other registered agreement or employment contract. Some of these say how much notice an employee must give, and some say none is needed. Under awards, the minimum often depends on how long you have been continuously employed. Authorised unpaid leave counts as service, but unauthorised absences do not.
A contract cannot require less notice than the legal minimum in an award or agreement. If there is no notice term, or no written contract at all, you may need to give reasonable notice. Employees who are not covered by an award or agreement generally do not have to give notice unless their contract says so. The Fair Work Ombudsman explains how much notice to give when resigning and has a calculator that shows the minimum requirements.
The notice period starts the day after you give notice. It ends on your last day of employment. Public holidays that fall within the notice period are part of it and do not extend it. Planning your dates with this in mind avoids confusion about your finishing day.
Casual employees
Casual employees do not have to give notice when they resign. It is still best practice to tell your employer which day will be your last. That courtesy helps with rosters. It also keeps the relationship on good terms if you need a reference later.
What happens if you do not give enough notice
Leaving without the required notice can cost you money. Most awards let an employer deduct up to one week’s wages from final pay in some cases. The employee must be 18 or older and must not have given the required notice. The deduction must also not be unreasonable.
There are limits on what can be taken. Only wages owed under the award can be deducted. Accumulated leave and above award payments cannot be touched. An enterprise agreement may also allow an employer to withhold pay where the required notice was not given.
Working out your notice or leaving early
Once you resign, you and your employer can talk about how the notice period will run. You might work the whole period. Your award, agreement or contract may also deal with ending notice early. Some employees and employers simply agree that the employee will finish sooner.
You can offer more notice than the minimum. Your employer does not have to accept the extra time and may hold you to the minimum. The employer should tell you which applies when you resign. This is worth clarifying early if you have a start date lined up elsewhere.
After receiving the minimum notice, your employer can tell you to leave early and pay you in lieu. That payment must cover the full notice period the employer would have had to give if it dismissed you. It is not based on the shorter period you gave when resigning. It also includes amounts such as loadings, allowances, overtime, penalty rates and bonuses.
Time you have already worked during the notice period does not reduce the payment. The Fair Work Ombudsman gives the example of an employee with four years of service whose award required three weeks’ notice. He worked one week before his employer told him to leave. The employer had to pay three weeks in lieu of notice, plus pay for the week he had already worked.
Taking leave during your notice
You can take paid annual leave during your notice period if your employer agrees. Sick or carer’s leave can be taken if you tell your employer as soon as possible. You may need to provide evidence if asked. Your employer cannot force you to take leave during your notice period.
What your final pay should include
Final pay is the money your employer owes you when your employment ends. Most awards say it must be paid within 7 days of your employment ending. A contract or registered agreement can set a different timeframe. Where none does, paying within 7 days is best practice.
The Fair Work Ombudsman lists the items to check in its guide to final pay when employment ends. Depending on your situation, these can include the following. Not every item will apply to everyone.
- outstanding wages at the correct rate under your award or agreement, including penalty rates and allowances
- unused annual leave if you work full time or part time
- annual leave loading that built up during your employment
- pay in lieu of notice if your employer ended your notice period early
Annual leave loading that built up during employment must be paid out, even if an award, agreement or contract says it is not payable. Sick and carer’s leave is not paid out when employment ends. If no award or agreement applies, the National Minimum Wage is the base rate. The Fair Work Ombudsman also has a Pay and Conditions Tool to help you check the figures.
Services Australia may ask for an Employment Separation Certificate. If it does, the certificate must include information about your final pay. Questions about tax and super on final pay are for the Australian Taxation Office. Keep your last payslip and any letters about your leaving together in one place.
When the business is closing or being sold
Sometimes people resign because the business is changing hands or winding down. The rules on notice and final pay above still apply to a resignation. Owners in that position may find our post on how assets are disposed of when a business closes useful background. Anyone considering selling a business also has staff entitlements to plan for.
Getting help with a problem
If something about your notice or final pay seems wrong, raise it with your employer in writing first. Many problems come down to a misread award or a payroll error. The Fair Work Ombudsman offers free information and tools for employees and employers. Businesses that want advice on their own obligations can read about choosing the right workplace lawyers.
Laws and processes differ between states and change over time. The award or agreement that covers you also shapes the answer, so check the current version. If you do seek legal advice, the same care people take when picking a divorce lawyer applies to a workplace matter. Ask about experience, fees and how they will keep you updated.
Frequently asked questions
Can my employer refuse to accept my resignation?
No. An employer cannot accept or reject a resignation. Acknowledging it in writing is simply good practice.
Do casual employees have to give notice?
Casual employees do not have to give notice when they resign. It is still best practice to tell your employer your last day. Doing so helps your employer plan the roster.
How soon should I get my final pay?
Most awards require final pay within 7 days of employment ending. A contract or registered agreement can set a different timeframe. If nothing sets one, 7 days is best practice.
Is unused sick leave paid out when I leave?
No. Sick and carer’s leave is not paid out when employment ends. Unused annual leave and leave loading are different and are paid to full time and part time employees.
This article is general information only and is not legal advice. Workplace laws and awards change, and your situation may differ. Speak with a qualified lawyer or the Fair Work Ombudsman about your own circumstances.
