At a glance: what are our legal obligations if an employee resigns?
If an employee resigns then legal issues can arise if you miss essential steps.
Resignation is not usually a hot spot for legal issues in employment, but here are some steps to follow to try to make sure legal problems don't arise for you.
1. Provide written acknowledgement of an employee's resignation.
An employee can resign verbally or in writing. It is a good idea to provide written acknowledgement of their resignation to avoid confusion.
2. Honour the employee's notice requirements, or come to an agreement
Check your employee's conditions of employment to see what they say about notice. Your employee's notice requirements might be set out in the NES or in the terms of the employee's agreement, award or contract.
If you can agree with your employee about varying the notice period so that the contract ends right away or is shortened, that's fine.
If you don't want the employee to continue working and you can't agree to shorten the period then you will have to pay out their notice period.
For more information, go to the the Fair Work Ombudsman.
3. Work out the employee's final pay
Final pay is what an employer owes and must pay an employee when the employee ends their employment. Check what your employee is entitled to.
Business Victoria has a list of reminders regarding an employee's final pay, including:
- calculate final payments of annual leave and accrued long service leave
- check with the Tax Office to see if any part of a lump sum is an eligible termination payment
- pay any remaining superannuation
- include relevant pay as you go (PAYG) withheld amounts in your next BAS, and
- collect information for your next fringe benefits tax (FBT) report
For more information go to Business Victoria and the Fair Work Ombudsman.
4. Exit procedures
Consider whether the following standard exit procedures are a good idea:
- make a time with the employee to complete a handover of duties
- confirm the employee's contact details
- fill the vacancy so the present employee can help train their replacement
- organise an exit interview to find out where your organisation can improve
- make sure the employee returns security passes and other property of the organisation
- cancel computer codes and passwords after the employee leaves.
You are not obliged to provide a reference or a statement of employment for an employee who is leaving but if you do, make sure that everything you say is accurate.