NOTICE OF RESIGNATION
NO-WIN NO-FEE UNFAIR DISMISSAL Sourced: Lexis Nexis (30 JUNE 2018)
How much notice is required?
The Fair Work Act 2009 (Cth) (FW Act) only makes provision for the minimum period of notice that must be given by an employer to an employee when terminating their employment. See Notice of dismissal. The notice requirements that apply to a resigning employee will often be set out in an applicable award, enterprise agreement or employment contract.
Awards and agreements that deal with notice of resignation generally stipulate the same period of notice for an employee as an employer, but without making any additional provision for the age of the employee concerned.
If there is no express clause requiring the employee to give notice of termination in an award, agreement or employment contract, the employee may be expected to provide sufficient notice to allow the employer to find an acceptable replacement.
Consequences of employee failing to give proper notice
Failure by an employee to give notice of termination as required by an award or agreement will amount to contravention of a civil remedy provision under the FW Act: ss 45 and 50. It may lead to the imposition of a monetary penalty against the employee, or an award of compensation if the employer can demonstrate that it suffered loss as a result of the employee’s breach: ss 545 and 546. See for example, Jetgo Australia Holdings Pty Ltd v Goodsall and Jetgo Australia Holdings Pty Ltd v Goodsall (No 2).
Where the notice requirements are contained in the employment contract, the employer may alternatively sue for breach of contract.
Many awards provide that if an employee fails to provide the required notice of resignation, an employer is entitled to withhold amounts from the employee’s final pay up to the equivalent of what the employee would have earned if they had worked out their notice period. For example, if an employee gives 2 weeks’ notice of termination, rather than the 3 weeks outlined in the relevant award, the employer could withhold 1 week’s pay from the employee’s termination payment. See Payment for work performed — Permitted deductions from wages.
The FW Act requires an employer to pay out to a departing employee any accrued, but untaken annual leave regardless of the circumstances of the termination. To the extent that a termination clause in an award treats accrued annual leave as part of the pool of termination pay from which the employer can withhold monies, it will have no effect. See Payment for annual leave on termination of employment.
If the notice requirements breached by the employee are set out in an enterprise agreement or contract, the employer can only withhold monies from the employer’s final pay with the employee’s agreement.
Responding to notice of resignation
When an employee tenders their notice of resignation, the employer can either:
In circumstances where an employee (often as an act of good faith) gives more notice of termination than required, the employer may direct the employee to only work the minimum notice period. This decision would usually be taken to protect confidential or sensitive information.
The employer should acknowledge an employee’s resignation in writing. The employer’s response should state whether the employee is required to work out their notice period, and where appropriate, the length of that period (see above), and remind the employee of their ongoing obligation of confidentiality to the company and any post-employment restraints set out in their contract.
Letter to employee after resignation [B. Pendlebury, Australian Encyclopaedia of Forms & Precedents]
Placing employee on garden leave following resignation
Garden leave describes a situation where an employer directs an employee to serve out their notice period at home without performing their normal duties. Garden leave clauses are typically found in the employment contracts of senior employees as well as those with access to customer or sensitive information. They provide a useful mechanism of protecting an employer’s business interests when an employee resigns.
If the employment contract does not contain an express clause entitling the employer to place the employee on garden leave, it will be a matter for the courts to decide whether such a term should be implied to give business efficacy to the contract: see for example Actrol Parts Pty Ltd v Coppi (No 2).
An employee who is placed on gardening leave is entitled to receive all of their ordinary remuneration and benefits up to the termination date. Any attempt by the employer to unilaterally remove a contractual entitlement, ie use of company car, may result in breach and repudiation of the employment contract, unintentionally relieving the employee of any post-employment restraints: Actrol Parts Pty Ltd v Coppi (No 2).
Annual leave while serving notice period
The basic rule is that an employer cannot direct an employee to take annual leave instead of working out their notice period. However, an employee can choose to take annual leave during their notice period with the agreement of the employer. While an employer cannot unreasonably refuse a request to take annual leave, ensuring that an employee has time to finish up a project or hand over work to an incoming employee are arguably reasonable grounds for denying such a request. See Annual leave under National Employment Standards.
Heat of the moment resignation
Generally an employer is entitled to take an unambiguous resignation at face value. Once notice has been given, the employee can only retract their resignation with the agreement of the employer.
However, in cases where the employer resigns in the heat of the moment or in a state of emotional stress or mental confusion, it may be deemed unreasonable for the employer to accept the employee’s resignation straight away. Courts and tribunals will look to whether there is something in the nature of the exchange between the employee and employer, in the employee’s conduct afterwards, or in the circumstances of the employee themselves to suggest that the employee did not actually intend to resign.
If a resignation is found to be invalid, the employer’s acceptance of the resignation may be characterised as a termination of employment on the initiative of the employer, paving the way for the employee to bring an unfair dismissal claim. To minimise the risk of unfair dismissal, where there are grounds to believe that an employee’s notice of resignation has been given in the heat of the moment of in adverse circumstances, the employer should not act on the purported resignation immediately. Instead the employer should attempt to clarify or confirm with the employee after a reasonable period of time that they truly intended to resign.
Practice Tip: It is best practice for an employer to ask the employee to confirm their resignation in writing. If the employee is unwilling to provide written confirmation of their resignation, detailed notes should be kept of the circumstances surrounding the resignation. This will help the employer to establish that it acted reasonably in accepting the resignation should the validity of the resignation be challeneged in a subsequent unfair dismissal claim.
The FW Act provides that a person has been dismissed where their employment is terminated at the employer’s initiative or where they are forced to resign because of conduct or a course of conduct engaged in by the employer (known as constructive dismissal): s 386. This definition is significant because it means that an employee who is forced to resign may pursue a subsequent unfair dismissal or general protections dismissal application. Further, in most cases, the employer’s conduct will amount to a repudiation of the contract, enabling the employee to resign without giving the required notice.
To establish constructive dismissal, the employee bears the onus of proving that he or she did not resign voluntarily, but was forced to do so. This requires an objective analysis of the employer’s conduct to determine whether it was of such a nature that resignation was the probable result or that the employee had no effective or real choice but to resign: Bruce v Fingal Glen Pty Ltd. For more information, see When is an employee dismissed?.If you have a similar issue to this in your workplace, call (07) 3807 3807 or email@example.com
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