When an employee resigns, there’s so many things you need to do. And often, you will need that employee to finish up some of their work, hand work over, or train their replacement.
But what if an employee resigns and doesn’t give you any notice? What about if the notice they do give isn’t enough?
If an employee resigns and gives you less than the required notice, you could pursue one of the following four options:
- Prosecute the employee
If the notice requirement arises under a modern award, enterprise agreement or legislation, you could prosecute the employee for breaching a statutory requirement.
In Griffith University v Leiminer (2008), the Federal Magistrates Court of Australia fined a university lecturer $500 for giving 7 weeks and 1 day’s notice, because it was less than the 6 months’ notice required under the University’s collective agreement.
- Refuse to accept the notice
If an employee gives notice that is less than that required by their employment contract, you could refuse to accept the notice and insist that the employee either give proper notice or continue working. In some cases, you might be able to obtain a Court order requiring the employee to continue serving you as an employee. This would require you to prove to the Court that the employee’s failure to serve proper notice would cause your business harm, which could not be adequately compensated for by a monetary amount of damages.
In most cases, it would be difficult to show that you have lost money by not having the services of the employee during the notice period. This is because, usually, the savings you would make from not having to pay the employee for time served would outweigh your losses. However, there may be special cases (for instance, the need to have the employee available to secure a particular business transaction).
- Seek damages
If an employee gives you less notice than their employment contract specifies, you could sue them for damages for breaching the contract. This requires you to show that you have suffered some loss flowing from the short notice. But it must be a loss that courts recognise, such as economic loss. You cannot recover damages for the inconvenience of having to replace someone sooner than you expected unless you can point to some loss of profit or extra loss caused by that outcome.
Again, in most cases, it would be difficult to show that you have lost money by not having the services of the employee during the notice period.
- Withhold payment
If there is a provision in the relevant industrial instrument that requires the employee to give notice and they fail to do so, then you will ordinarily be entitled to withhold payment for the notice period not served.
There are some specific tests to determine when a penalty provision should be enforced, for example, it must be a genuine pre-estimate of the damages you are likely to suffer.
You might choose to include a provision in an employment contract which states that if an employee resigns early, e.g. during the first year of employment, you can deduct an amount for the costs of training the employee. While this might be justified on the basis that you have not recouped the benefits of the investment made into the employee, the Fair Work Act restricts the capacity to enforce such a provision. The amount deducted must correspond to the market value of the employee’s training, and the employee must authorise the deduction in writing signed by him or her at the time of deduction.