Resignation: play by the rules when giving notice

Analysis

Resignation: play by the rules when giving notice

When employees resign, they are legally obliged to provide an employer with adequate notice. Paul Munro explains these obligations, and discusses other issues that arise when workers call it quits.

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Much has been written on an employer’s obligations with respect to giving notice, but employees are also legally obliged to provide proper notice, through either the applicable modern award or enterprise agreement, or the individual contract of employment.

Minimum period of notice – employee

 
The statutory minimum periods of notice of termination under the National Employment Standards only apply to notice given by an employer. The required period of notice of termination to be given by an employee upon their resignation is determined by the applicable modern award or enterprise agreement, or individual contract of employment.

Most modern awards require an employee to provide the same period of notice as that required by the employer – i.e. the notice required under the NES – except there is usually no requirement on an employee to give an additional week’s notice if the employee is aged over 45 years. 

Forfeiture of monies


Failing to provide proper notice of termination may allow an employer to deduct the equivalent period of notice from monies due on termination of employment. This is a common term in most modern awards. For example, clause 22.2 of the Manufacturing and Associated Industries and Occupations Award 2010 provides that: “if an employee fails to give the required notice the employer may withhold from any monies due on termination under this award or the National Employment Standards, an amount not exceeding the amount the employee would have been paid under this award in respect of the period of notice required by this clause, less any period of notice actually given by the employee.” 

Form of notice


What form of notice from an employee is considered reasonable?
 
An employer should request an employee’s resignation in writing so as to avoid any misunderstanding, although this may difficult to obtain in some circumstances. An employer can accept a verbal resignation, including over the telephone, however, an employer should seek confirmation, preferably in writing, from the employee. In the case of a telephone resignation, an employer should verify the employee's identity by asking particular identification details known only to the employee.
 
Where verbal notice is given at the workplace, it may be prudent for the employer to have a witness to the resignation. The employer’s request for an employee’s resignation in writing is to avoid any ‘heat of the moment’ decisions the employee may later regret. See Commonwealth of Australia – re P.T. Wilson v Australian Tax Office, PR901127 [2001] AIRC 163; Burns v Aboriginal Legal Service of Western Australia (Inc) AIRC Print T3496. 

‘Heat of the moment’

 
If the words used to resign are unambiguous, an employer is entitled to treat them as such. However, words may be said “in the heat of the moment”, which industrial tribunals refer to as ‘special circumstances’.

Where special circumstances arise it may be unreasonable for an employer to assume and accept a resignation. A reasonable period of time should be allowed to lapse and if circumstances arise which suggest further inquiry is needed to ascertain if the resignation was intended, then such inquiry is ignored at the employer’s risk.
 
Employers run the risk that evidence may be forthcoming which indicates that in the ‘special circumstances’ the intention to resign was not the correct interpretation when the facts are judged objectively. See Canh K Ngo v Link Printing Pty Ltd (1999) 94 IR 375; Bernadette Minato v Palmer Corporation Limited [1995] IRCA 316

Contract of employment – no notice provision

 
Is there an implied term requiring an employee to give reasonable notice in the absence of an express contractual notice period? If so, how is reasonable defined?
 
The Federal Court of Australia determined the expected period of time it would take an employer to obtain an acceptable replacement as the principal purpose of requiring reasonable notice to be given. The period of requisite notice need not be the same as that expected of the employer. These questions were considered in Grout v Gunnedah Shire Council [1994] IRCA 54

Too much notice by employee

 
Sometimes an employee, in good faith, provides a greater period of notice than is required under the applicable industrial instrument or contract of employment. The employer is not obliged to accept such notice. For instance, the employer could inform the employee that it would only accept notice for the period prescribed by the applicable industrial instrument or contract of employment. The employer may wish to do this because of business sensitivities related to the employee’s position, e.g. sales or marketing manager (exposure to company clients) or chief executive officer (knowledge of the company’s future business strategies). In instructing the employee to give the required notice, the termination is still regarded as being by the employee because the employee has already informed the employer an intention to resign. 

Abandonment of employment

 
Abandonment usually arises in circumstances where an employee is absent from work without a reasonable excuse for an unreasonable period of time without having communicated any reason for the absence. For an employee to have abandoned their employment, it must be clear the employee has demonstrated an intention to no longer be bound by the terms of the contract of employment. The applicable modern award or enterprise agreement may contain terms which refer to the proper procedure relating to an abandonment of employment.
 
In common law, the abandonment of their employment by an employee constitutes a repudiation of their employment contract. However, the contract is not terminated until, or unless, that repudiation is accepted by the employer. It is the action of the employer in accepting the repudiation that brings about a termination of the employment. 

Taking leave during period of notice

 
In giving notice of resignation, an employee may also request a period of annual leave during the notice period. Is the employer obliged to accept the employee’s request in this circumstance?
 
Under the National Employment Standards (s88), annual leave may be taken for a period agreed to between an employee and his/her employer. An employer cannot unreasonably refuse a request to take paid annual leave. It could be argued it is reasonable to refuse an employee’s request for annual leave during a period of notice as the requirement for notice is to allow an employer sufficient time to fill the position. The employer may also want to use the notice period as an opportunity for the departing employee to provide induction for the new employee.
 
An employer cannot direct an award-covered employee to take annual leave, this being subject to the applicable modern award. However, under the Fair Work Act (s94(5)), an employer may require an award/agreement free employee to take a period of annual leave but only if the request is reasonable.  Requests that may be reasonable in the circumstance include where the employee has an excessive amount of accrued annual leave, or if the company is being shut down for a period.
 
The bottom line: An employee is obliged to observe legal requirements regarding notice of resignation, although it can be difficult for an employer to enforce such obligations.

See also: Employee fined for not giving notice of resignation
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