How To Manage Resigning Employees In Australia

Employees move on - it’s a normal part of running a team. But when someone resigns, you’re suddenly juggling workload, knowledge transfer, legal obligations and team morale, all at once.

Handled well, a resignation can be smooth and professional. Handled poorly, it can lead to compliance risks, unexpected costs, and reputational issues.

In this guide, we step through what resignation means for your business, what to do when an employee gives notice, how to manage pay and entitlements, and the key documents and processes that protect your business as people transition out.

What Does Resignation Mean For Your Business?

When an employee resigns, they’re choosing to end their employment on their own initiative. Your obligations are different to a termination or redundancy - but there are still clear legal steps to follow.

In most cases, resignation triggers two things for you as the employer:

• Managing the notice period (workload, handover, leave requests, and access to systems), and
• Finalising employment properly (final pay, accrued entitlements, and safeguarding your business information).

Your starting point is the employment agreement, any applicable modern award or enterprise agreement, and the National Employment Standards (NES). Together, they set minimum notice, entitlements, and rules for the notice period.

It’s a good idea to check your Employment Contract first - it should spell out notice, duties during the notice period, post-employment restraints and confidentiality obligations.

How Much Notice Are Employees Required To Give?

There’s no single rule that fits all resignations. Notice requirements usually come from the contract and, if relevant, a modern award or enterprise agreement.

Contractual Notice

Most contracts set a notice period (for example, two or four weeks, longer for senior roles). If the employee’s contract is silent on notice, check any applicable award.

Award or Agreement Notice

Some awards specify minimum notice an employee should give when resigning. If the contract requires more notice than the award, the longer contractual period usually applies (provided it’s reasonable).

What If They Don’t Give Enough Notice?

Employees can resign with less than the required notice, but different consequences can follow depending on the contract or award. Some awards allow you to withhold part of wages if insufficient notice is given, but only in very limited circumstances and never from accrued entitlements.

Before taking any step that affects final pay, review your obligations carefully. As a starting point, read up on resignation notice periods and whether contractual or award provisions apply to your workplace.

Can You Use Payment In Lieu Of Notice?

Yes. If your contract allows it, you can end employment sooner by paying the employee the amount they would have earned during the notice period instead of having them work it out. This can be helpful where ongoing access presents risk or the role can’t be productively performed during notice. For employer considerations, see payment in lieu of notice.

Managing The Notice Period: Work, Leave And Handovers

The notice period is your opportunity to protect business continuity and relationships with customers and suppliers. Clear expectations make a big difference.

Work Duties And Handover

• Set a written handover plan: projects, deadlines, files, and contact lists.
• Reassign access and approvals progressively to reduce single points of failure.
• Schedule knowledge-transfer sessions and document processes that live “in their head”.

Leave During Notice

Employees may ask to take annual leave, sick leave or unpaid leave during notice. You’ll need to assess requests under the contract and any award. Reasonable annual leave requests can often be approved, but you can decline in certain circumstances if it’s unreasonable or impacts operations.

There are special rules around sick leave and evidence requirements. For a deeper dive into how this works during the notice window, see employee leave during notice.

Can You Direct Them Not To Work? (Garden Leave)

Depending on the contract, you may be able to place the employee on garden leave - they remain employed and paid, but don’t perform their usual duties and may be directed to stay away from the workplace or not contact clients. This is common where there’s commercial sensitivity or client transition risks. Learn more about the mechanics and limits of garden leave.

What If They Refuse To Work The Notice?

Some employees want to finish immediately. Depending on your contract or award, you may agree, or you may consider payment in lieu of notice to fast-track the exit. If they simply stop attending, treat it as abandonment and follow your documented exit process to protect your business and finalise entitlements correctly.

Pay And Entitlements On Resignation

Final pay must be accurate and on time. This protects your brand and reduces dispute risk.

What Should Be Included In Final Pay?

• Outstanding wages for hours worked up to the last day
• Accrued and untaken annual leave (with leave loading if applicable under an award)
• Any accrued but unused long service leave (state-based rules apply)
• Other contractual amounts owed (e.g. commissions that have vested under the contract)

Make sure you factor in superannuation rules correctly, including when super applies on termination amounts. A helpful overview is available here: super on termination payments.

Annual Leave On Resignation

Employees are entitled to be paid out accrued annual leave on resignation. If an award or agreement provides for leave loading on payout, include it. Employers often ask about timing - aim to process the final pay promptly and within any timeframe set by an award, agreement, or company policy. The specifics are covered in annual leave on resignation.

Can You Deduct Money From Final Pay?

Deductions are strictly limited. You generally can’t deduct for property not returned or training costs unless a lawful and written deduction arrangement exists and it complies with the Fair Work Act and any award. Even where awards allow limited deductions for insufficient notice, you still need to pay out accrued entitlements in full.

If in doubt, check the rules before acting - the penalties for unlawful deductions can be significant.

Calculating Final Pay Confidently

It’s worth double‑checking the figures, especially for team members with variable hours or commissions. This process is easier if you follow a checklist and keep award rules front-of-mind. For a structured approach, see calculating final pay.

Protecting Your Business: Confidentiality, Restraints And Property Return

Resignations can expose sensitive information and relationships. The right contractual settings and exit steps reduce that risk.

Confidential Information And IP

Your employment agreements and policies should make confidentiality obligations crystal clear and ensure intellectual property created in the course of employment is owned by the business. Remind the departing employee of these ongoing obligations in writing, especially if they’ve had access to client lists, pricing, strategy or code.

If you collaborate with non-employees or need to share sensitive information with third parties during handovers, it can help to use an NDA to keep control over confidential information.

Post-Employment Restraints

Restraint of trade clauses can help protect customer relationships, pricing and confidential know‑how in the critical period after someone leaves. Enforceability depends on careful drafting, reasonableness, and the employee’s role and access. If restraints matter to your business, it’s worth getting tailored restraint of trade advice before you need to rely on them.

Company Property And System Access

Plan the return of devices, access cards, files and samples early in the notice period. Maintain a checklist that covers:

• Hardware (laptops, phones, tokens, keys)
• Software and data (email, CRM, cloud storage, code repositories)
• Shared credentials and authenticator resets
• Client materials and work product

Confirm all data has been returned or securely deleted, and document the handback to avoid disputes later.

Non-Disparagement And Transition Messaging

Departures can trigger rumours. It’s sensible to align on external messaging and ensure the employee understands any non‑disparagement and confidentiality obligations. Where appropriate, you can formalise this in a short letter or, for sensitive exits, a deed. For context, see how businesses use non‑disparagement agreements and when a deed of release and settlement is suitable.

A Practical Process: From Resignation Letter To Offboarding

A simple, repeatable process keeps resignations calm and compliant. Here’s a practical framework you can adapt to your workplace.

1) Acknowledge The Resignation In Writing

Confirm the resignation, the last day of employment (taking notice into account), and how the notice period will be managed (working notice, garden leave, or payment in lieu). If there’s a contractual handover requirement, restate it here.

2) Map The Handover

• Agree responsibilities, deliverables and due dates for handover tasks
• Nominate a point person to receive knowledge (documents, contacts, account history)
• Schedule client introductions where relationships are key

3) Manage Leave Requests

Assess leave requests against your contract and award. If leave would undermine the handover, offer alternatives (e.g. shorter breaks, flex days) and explain the operational reasons for your decision. More guidance is available on leave during the notice period.

4) Lock Down Access Early (But Sensibly)

Adjust permissions on a “least access required” basis. If you’re concerned about data or client poaching, consider garden leave (if contractually available) or move the employee into non‑sensitive duties while handover occurs.

5) Collect Property And Confirm Data Return

Use a checklist and get written confirmation of return/deletion. Don’t forget shared credentials, personal devices used for work (BYOD), and any third‑party tools connected via SSO.

6) Prepare And Pay Final Entitlements

Calculate wages, leave payouts and any other amounts owing, and pay them within the required timeframe. If you’re unsure about specific components or superannuation, cross‑check against your award and the NES, and refer to final pay and super on termination resources.

7) Confirm Ongoing Obligations

Send a short reminder of confidentiality, IP ownership, restraint obligations and any non‑disparagement requirements. Where appropriate, attach relevant extracts from the contract to make expectations clear.

8) Close The Loop With The Team And Clients

Keep it professional and respectful. Plan your internal announcement and customer communications to reassure stakeholders and provide a clear point of contact going forward.

9) Capture Lessons And Update Templates

After each resignation, update your handover checklist, access run‑sheet and policy wording to improve next time. If your contracts aren’t aligned with how you manage exits in practice, it may be time to refresh your termination documents and HR policies.

Frequently Asked Questions

Can We Refuse A Resignation?

No. Employment is a voluntary relationship - you can’t force an employee to stay. You can, however, hold them to their contractual notice (or agree on payment in lieu or garden leave).

Do We Have To Provide A Reference?

No. There’s no legal requirement to give a reference. If you do, ensure it’s accurate and consistent to reduce defamation or misleading conduct risks.

What If The Employee Resigns Effective Immediately?

Clarify the last working day, arrange the return of property and access removal, and calculate final pay. If your contract or award permits deductions for insufficient notice (and you choose to exercise that right), apply the rules carefully - accrued entitlements still need to be paid in full.

Can An Employee Take Personal Leave During Notice?

Yes, genuine personal/carer’s leave remains available during notice in line with the NES and evidence requirements. You can still manage operational impacts through a solid handover plan and, if needed, garden leave.

Key Legal Documents To Support Smooth Resignations

Having the right documents in place makes resignations simpler and safer for your business.

• Employment Contract: Sets notice, duties during notice, confidentiality, IP ownership, restraints and the option for payment in lieu of notice.
• Workplace Policies: Clarify exit procedures, property return, data handling and references. If you’re building or updating your suite, consider a structured staff handbook package.
• Non-Disclosure Agreement (NDA): Useful for third-party handovers or where contractors assist with transition - see NDA.
• Deed of Release (where appropriate): For negotiated exits that include additional payments or obligations, a deed of release and settlement can finalise matters cleanly.
• Restraint Clauses: Ensure your contracts contain properly drafted restraints that are likely to be enforceable - tailored restraint advice is recommended for key roles.

Key Takeaways

• When an employee resigns, check the contract, any award and the NES to confirm notice requirements and obligations.
• Choose how to manage the notice period - working notice, garden leave or payment in lieu - based on risk and productivity.
• Process final pay accurately and promptly, including accrued leave and any amounts owed, and apply super rules correctly.
• Protect the business with strong contracts, clear confidentiality and IP settings, and enforceable restraints where appropriate.
• Use a consistent offboarding process covering handover, access removal, property return and clear communication.
• Keep your documentation current - review your Employment Contract, policies and termination templates so they align with how you operate.

If you’d like a consultation on managing resignations in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.