Voluntary Separation and Termination through Resignation

Under the Fair Work Act, 2009, casual and probationary employees and those on a fixed-term contract do not have to give notice when resigning. Other employees need to give notice, preferably in writing. This can be via a resignation letter or email. Giving a verbal resignation is also allowed. The length of notice is set under the Fair Work Ombudsman's National Employment Standards (NES).

The time period depends on the terms of the employee’s award, agreement or employment contract. If an employment contract does not state a required notice period, or an employee does not have a contract, the employer may ask for a reasonable period of notice to be used. If an employee is over 45 years old, the NES requirement may involve one extra weeks’ notice. State employment laws may have additional criteria for calculating the length of notice, including length of service and age of the employee.

Ifoversee voluntary termination of employment in your organisation, you should check the requirements for the notice period in your State or Territory.

Longer Notice Period Requests

According to Employsure, an employee can give a longer period of notice than required. The employer does not have to accept this and can ask for only the minimum notice period to be worked.

 The decision to accept longer notice may depend on several things, including the business's needs and the relationship between the employer and employee. The relationship between the business and the resigning employee will be strengthened. The employee may be an ally for the business in the future.

Accepting a longer notice period may generate goodwill among directly impacted staff and other internal and external stakeholders.

Example

• staff will appreciate the decision to support the resigning employee and see the longer notice period as a possible opportunity for mentoring and ensure a more effective handover
• customers will appreciate the time being given to handing over.

Under the Fair Work Act 2009, an employer cannot reject an employee’s resignation. There is no formal requirement to acknowledge a resignation, but it is a good business practice. A short, informal email or conversation confirms acceptance of the resignation and can establish a positive and friendly approach to the coming change.

An employee may assist the business in practical ways during their notice period, for example, by contributing to documentation or mentoring someone else. When an employer acknowledges their resignation, there may be an opportunity to ask the employee if they have suggestions to improve the job role.⁷

An employer must ensure that the following tasks are carried out in response to a resignation.

Employee termination checklist

Managing the employee termination process effectively and complying with contract terms and relevant workplace legislation is essential. Following is a basic checklist of what needs to be considered.

Pre-termination

It is essential to ensure employee termination doesn’t breach unfair dismissal laws or industrial agreements that apply.

Written confirmation

The resignation must be in writing, and you must ensure the notice period is correct:

• store the resignation letter in the employee’s personnel file
• include details in the personnel file of the notice period and circumstances for the end of the employment.
• formally acknowledge an employee’s resignation in writing, and it should state when the employee’s last day of work will be.

Entitlements

Check all contract and relevant award or agreement obligations are being met, and ensure all entitlements are received, for example:

• any outstanding wages, bonuses, sales commissions or other remuneration still owing
• any pay in lieu of notice of termination
• any accrued annual leave and long service leave entitlements
• the balance of any time off instead of overtime that the employee has accrued but not yet taken
• any redundancy pay or entitlements if the employee has been made redundant and is eligible
• prepare an Employment Separation Certificate if required.

Exit interview

Although this is not essential, an exit interview can help the organisation understand why an employee is choosing to leave and will also provide an opportunity to review any issues raised.

Return of company property

All company property needs to be returned and checked for damage. This can include keys, documents, information technology equipment, intellectual property items etc. Cancel and change all relevant passwords and pin codes.

Keep written records

Under the Fair Work Act 2009, an employer must keep records of when an employee leaves the business, including the name of the person who terminated their employment. Details must include how the termination took place. You might need to provide written notification that an employee has been terminated to other organisations (superannuation funds, Centrelink, etc.) so ensure records are accurate.

How to Determine Owed Leave

According to Employsure, an employee can do the following.

• Take paid annual leave during a notice period if the employer agrees to this. The notice period can include public holidays but does not usually extend the time period.
• Take paid sick or carer’s leave during a notice period if they give notice of the leave as soon as possible and provide a medical certificate or other evidence if the employer asks for this.
• If they have used up all their paid sick leave, take unpaid leave. As with paid sick leave, they must give notice as soon as possible and provide evidence if asked.

How to Calculate Final Pay

The Fair Work Commission stipulates that final pay for an employee should include the following entitlements:

• outstanding wages for hours worked, including penalty rates and allowances
• any accumulated annual leave, including leave loading (bonus payment to an employee when annual leave is taken) if it would have been paid during their employment if applicable:

1. accrued or pro rata long service leave
2. payment in lieu of notice
3. redundancy pay

Long service leave varies from State to State. It’s important that HR people know the relevant legislation in the state where the person works.

The final payment must be given to the employee as follows:

• within seven days of their employment ending, or
• the next payday, or
• as stipulated in their award, agreement or employment contract.

If there is no stipulated payment period, the best practice is to make payment within seven days or on the next scheduled payday.

Employment Separation Certificates

Any employee or former employee can ask for an employment separation certificate. The completed certificate should be supplied within 14 days from the requested date. Centrelink may also require a certificate.

An employment separation certificate is form 001 from Services Australia. It is downloadable and can be completed and lodged online or printed, completed and given to an employee. It is good business practice for an employer to issue a certificate within 14 days of the employee leaving their employment.

The certificate should provide the following employment details:

• end of work date
• details of leave or redundancy payments
• the person’s regular wage
• amount of the final payment
• amount of any money still owed to the employee by the employer
• reason for ceasing the employment
• if the person left work because of industrial action or voluntarily
• details of any personal injury or compensation.

Centrelink Requirements and Processes

The Department of Human Services usually requires a certificate when an employee applies for Centrelink benefits after being terminated within twelve months. A certificate may also be required when employees decrease their working hours or change from full-time to casual work.

A certificate is not required if an employer is no longer in business or when an employee has not been employed in the last twelve months, or has suffered sexual harassment or violence in the workplace.

Centrelink will check that a certificate has been fully completed, is signed by the employer and has not been altered.

Key Point

Here are some excellent business practice tips for employment separation certificates:

• issue a certificate to every employee who leaves your organisation
• complete each certificate in full and sign it
• if a certificate is filled out by hand, use the same pen to finalise the details and for the signature.

There may be situations where an employer does not want an employee to work their notice period and would prefer to pay them out. This is called payment in lieu of notice, and it is the employer’s right to make this decision.

The amount paid must equal the total amount the employee would have been paid if they had worked until the end of the notice period.

When an employee leaves before the end of the required notice period, or insufficient notice is given, the employer can withhold pay if allowed under an award, agreement or employment contract.

Where an award allows pay to be withheld, it can only be deducted from the wage’s component of the final payment. It cannot be deducted from other entitlements, such as accumulated leave or over-award payments.

An employee can withdraw their resignation in very limited circumstances Under the Fair Work Act 2009, employees can change their minds and withdraw their resignations, but generally speaking, the employer is under no obligation to accept the withdrawal. In some circumstances, the employer may have to take the employee back, for example, if directed by the Fair Work Commission or Federal Court.

Case Study

Frank is 19 years old and has been employed in an entry-level role for eight months. He has never really enjoyed the work, but he is always pleasant and friendly and carries out tasks as required. At his last performance review, he voiced his feelings about probably not wanting to stay in this line of work long-term and said he was thinking of joining the armed services.

One day, Frank hands his written notice to his supervisor, saying that he has been accepted into the Army and must report for basic training in a week. His required notice period is two weeks.

When this insufficient notice is discussed with Frank, he offers to work overtime, either paid or unpaid, during the notice week to finish two client jobs he has been working on. The supervisor discusses Frank’s situation with the business owner, who decides that one week’s notice is acceptable because Frank has been a reliable employee. He has offered to assist by finishing the outstanding work. The role should be easy to fill.

Frank is happy with this decision and leaves the company on good terms with everyone, promising to recommend its services when possible. This is a win-win situation for Frank and his employer.

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