When an employee decides to resign you should take the following steps to ensure the process is handled professionally and legally.

1. Determine if the resignation is valid

Just because an employee resigns, it does not necessarily mean the resignation is valid. A valid resignation occurs when an employee provides their employer with:

• the correct notice period, as specified in their employment contract or other relevant industrial instrument, such as a modern award; and
• the date they intend to be their last day.

2. Ask the employee to submit their resignation in writing if they haven’t already

This will help limit the risk that the date of resignation will be an issue later on. You should also accept an employee’s resignation in writing.

3. Consider which option is in your best interests and/or contractually allowable to do

• Option 1: Allow the employee to continue in their role

Allowing the employee to continue in their role until the end of the notice period may benefit your business, but you should only choose this option if the risk of the employee doing something harmful to your business is low.

• Option 2: Pay out the employee’s notice period

It may be in your best interests for the employee to cease working as soon as they hand in their resignation.

Normally, you are within your rights to simply pay the employee in lieu of notice, but it is important that you check the relevant employment contract or industrial instrument to confirm your ability to do this.

Payment in lieu of notice is paying the employee the full amount they would have been paid if they had worked until the end of the notice period. This includes:

• incentive-based payments and bonuses:
• loadings;
• monetary allowances;
• overtime; and
• penalty rates.

• Option 3: Direct the employee to take gardening leave

Gardening leave occurs when an employee who has resigned is required to serve all or part of their notice period without performing any of their normal duties.

During this period, the employee is still engaged by you, so they cannot work for anyone else or act against your interests. The benefit of gardening leave is that it gives you breathing room to cement relations with clients and other employees if the departing employee is moving to a competitor or setting up a competing business.

The downside is that you have not officially cut ties with the employee, and they will continue accruing leave during this period.

We recommend you use this option only if:

• the contract allows for gardening leave to be given;
• the employee is departing to a competitor;
• there is a risk that the employee may poach your clients and employees; and
• you need additional time to protect your clients and employees.

You should seek legal advice before directing an employee to take gardening leave, as it is prohibited in certain situations, e.g. when it is not provided for in the employment contract.

4. Remind the employee of their obligations during the notice period

These will include:

• faithfully serving the business;
• maintaining the confidence of the business’s confidential information;
• respecting the business’s intellectual property; and
• not doing anything that might lead to a conflict with any of the above duties.

5. Advise the employee of their post-employment obligations

These will include:

• respecting your intellectual property;
• observing any contractual post-employment restraints; and
• not disclosing or misusing your confidential information.

6. Organise the return of all company items

7. Advise the employee of how you will handle communications for them pre- and post-departure

8. Investigate any suspicious behaviour by the departing employee

This could include checking:

• the emails sent and received by the employee;
• the employee’s out-of-hours access; and
• any excessive photocopying carried out by the employee.

9. Consider whether it is appropriate to organise a farewell event for the employee

10. Ensure that final wages and entitlements are processed prior to the employee’s departure or in the following pay run