Notice Periods: What You Need to Know
Posted by: on 15 August 2015 in Human Capital Management
August 15 – by David Bates
This month’s Workforce Guardian from ADP webinar is all about dismissals, and notice periods are a key part of the dismissal process.
In this week’s blog, we take a closer look at notice periods, and answer some of the most commonly received questions from ADP clients.
- Where Does This Entitlement Come From?
An employee’s right to receive notice in advance of their dismissal comes from the National Employment Standards (NES), which are themselves an important part of the Fair Work Act 2009.
The NES entitlements cannot be amended or waived by an employer, even if an employee agrees to waive some or all of their entitlements. The maximum penalty for failing to provide an NES entitlement is over $50,000!
- Are All Employees Entitled to Notice?
No, some workers are not entitled to receive notice. An employer is not required to provide notice if the employee:
- Is being terminated for ‘serious misconduct’, such as theft or workplace violence, or
- Has reached the end of a ‘fixed-term’ contract of employment, or
- Is a casual employee
In almost all other cases, notice must be provided when an employee is dismissed.
- How Much Notice Must Be Given?
The amount of notice that must be provided is based on their employee’s period of continuous employment, and is as follows:
Employees Period of Continuous Employment
1 year or less (including during ‘probationary periods’)
More than 1 year but not more than 3 years
More than 3 years but not more than 5 years
More than 5 years
If the employee has worked for their employer for at least 2 years and is aged over 45 at the time of dismissal, they must also receive one additional week of notice.
It is very important to note the NES contains only the minimum entitlements that must be given to employees.
If the employee is covered by a Modern Award, Enterprise Agreement, or contract of employment that provides a more generous notice period, then this more generous notice period must be provided.
- Can Employee’s Be Paid ‘In Lieu’ of Notice?
Yes. An employer can always choose to pay an employee ‘in lieu’ of them working through their notice period.
- When Does an Employee’s Employment Actually End?
This will depend on whether the employee works through their notice period or receives payment in lieu of notice:
If they work through their notice period, their employment comes to an end at the conclusion of the notice period
If all or part of the notice period is paid in lieu of it being worked, employment ends on the last day the employee performs work.
- Does Leave Accrue in Relation to Notice Paid in Lieu?
No. Leave only accrues during an employee’s working time. As notice paid in lieu does not count as working time, no leave accrues in relation to the amount paid out. Conversely, leave will continue to accrue during any period of notice actually worked by the employee.
- Does An Employee Have to Provide Notice if They Resign?
This depends on whether the employee is covered by a Modern Award/Enterprise Agreement. If they are, they will need to provide notice in accordance with that Award or Agreement. If they are Award/Agreement-free, an employee will not usually be required by law to provide notice in the event of resignation.
If an employee is covered by an Award/Agreement and they fail to provide the applicable notice period, their employer will usually (though not always) be entitled to withhold from their final pay an amount that equal to the wages that would have been payable during the period of notice not provided.
For example, if the employee was required by an Award or Agreement to provide 3 weeks’ notice – but they only provide two weeks’ notice – their employer may be entitled to withhold one weeks’ wages from the employee’s final pay.
- What If An Employee Provides More Notice than is Legally Required?
You are only required to accept the legally-imposed minimum notice period. If an employee provides a longer notice period than required, you can generally refuse to accept the longer period and instead ask them to finish up at the end of the legally-required minimum period instead.
We trust this information helps you ensure compliance with notice period obligations in your business.