Notice Periods

We know that employment relationships don’t always go the way we want them to. Some are short, some are long-term, and some sit somewhere in between. There is a magnitude of reasons as to why the relationship just isn’t working out, and that’s okay.

An employee departure can be both a positive and negative thing. That’s why we have safeguards in place to support both sides of the equation. It’s also a highly emotive time for both parties and so it’s alright to feel a range of emotions. The important thing is that you act in a way that best protects you and your business.

This might mean looking at notice periods in contracts, evaluating whether or not the employee works out their notice period or whether they are paid out their notice. Do you need them to complete a handover to another staff member? It’s important to note that if an exit from a business does leave gaps, how can you transfer the departing team members knowledge back into the business? Is this something that needs to happen, or are you okay with that knowledge leaving with them?  Notice periods provide a safeguard for the employer so that they have adequate time to complete these important processes.

How long should a notice period be?

Notice periods can be confusing, as their terms are not standardised across all roles or types of employment. The length and type of notice period an employee or employer are entitled to give depends on varying factors. As a rule of thumb this information is within your employment contract. If the contract is silent then the default is reasonable notice (!?!) which again depending on the position is around 2-4 weeks.

The Fair Work Act does set out minimum notice period based on years of service.

  • For employees that have been employed one year or less; one week
  • For employees that have been employed between one to three years; two weeks
  • For employees that have been employed between three to five years; three weeks
  • For employees that have been employed for more than five years; four weeks

However, some awards do provide additional time on top of this and if the Employee is aged over 45 years old, additional notice must be granted.

During this time an Employee can work out their notice period or an employer can pay it out to them (this is known as pay in lieu of notice). The employer could also organise a combination of the two. Some other things to consider around notice periods:

  • If a Public Holiday falls during this time, then the Public Holidays are absorbed by the notice period. They do not extend the notice period.
  • If an Employee wishes to take Annual Leave during the notice period, then they can come to an arrangement with the Employer.
  • An Employer cannot force an Employee to take Annual Leave during their notice period, unless they wanted to make a payment in lieu of notice instead.

Notice Periods and Final Payment

Which leads us to the final payment. Fair Work have strong regulations around this.

Employees must be paid the following entitlements in their final payment. Outstanding wages for hours they have worked (including penalty rates and allowances), any accumulated annual leave, including annual leave loading if it would have been paid during employment and, if applicable, other entitlements like long service leave, payment in lieu of notice or redundancy pay.

Personal leave is not paid out. It is also recommended and in fact, required in some cases (Awards), that this process must occur within 7 days.

Notice Periods: Ensuring a Smooth Transition

Our other top tips to ensure a smooth transition:

  • Make sure you allocate the departing employees responsibilities
  • Make sure you obtain all your property and equipment back
  • Communicate the departure to your existing team
  • Conduct a final handover meeting to ensure that all information has been absorbed by the business.

It’s worth mentioning that there are other situations that may influence an employee’s notice period. This might be ending employment under probation or in the circumstances of serious misconduct, no notice is needed. If you’re not sure of what is applicable to you then we suggest you reach out for further advice – contact@nowactually.com.au or book a meeting with our team!