Notice Periods in Australia | Sprintlaw Australia

If you employ staff, sooner or later you’ll face the “notice period” question. An employee resigns and wants to leave next week. You decide a role isn’t working out and need to end employment properly. Or you’re planning a restructure and want to avoid a costly misstep.

In all of these situations, understanding what a notice period is (and how it works in practice) helps you run your business smoothly, reduce the risk of disputes, and stay compliant with the Fair Work rules that apply to most Australian workplaces.

This guide is written for small business owners and employers. We’ll break down what a notice period is, where it comes from (law, awards, agreements and contracts), what to do when someone doesn’t work their notice, and the common traps employers fall into.

What Is The Notice Period (And Why Does It Matter For Employers)?

In an employment context, the notice period is the amount of time that must pass between:

the date someone gives notice that employment will end (either you end it, or the employee resigns), and
the employee’s final day of employment.

During the notice period, the employee usually remains employed. Depending on what you direct (and what the contract, Award or other applicable rules allow), they may keep working their usual duties, take approved leave, be directed to take leave in limited circumstances, or have their notice paid out.

For small businesses, notice periods matter because they affect:

Continuity: how you cover shifts, manage client work, and hand over responsibilities
Cost: whether you need to pay out notice, and how final pay is calculated
Risk: the likelihood of an unfair dismissal claim, underpayment claim, or dispute about final pay
Culture and reputation: how exits are handled can impact the morale of remaining staff

It’s also worth noting that many people search “whats notice period” when they’re unsure whether a contract clause is enforceable or whether the Fair Work minimums apply. As an employer, it’s a good idea to treat notice periods as a compliance and planning issue, not just an HR admin task.

Where Does The Notice Period Come From In Australia?

In Australia, the notice period isn’t a single number that applies to every worker. It can come from several sources, and the correct approach is usually to identify which rule applies to your employee and then apply the relevant minimum entitlements that must be provided.

1) The Fair Work Act (National Employment Standards)

For most employees, the minimum notice of termination an employer must provide is set by the National Employment Standards (NES) under the Fair Work Act. This is often the “floor” of your obligations.

The NES minimum notice depends mainly on the employee’s length of continuous service. In broad terms, longer-serving employees generally require more notice.

Some employees may also have an additional notice entitlement (for example, older employees with a certain length of service), depending on the rules that apply.

2) A Modern Award Or Enterprise Agreement

Many small businesses have staff covered by a Modern Award (like retail, hospitality, clerical/admin, etc.) or, less commonly, an enterprise agreement.

A Modern Award might:

set notice requirements (including for some casual conversion scenarios),
include rules about roster changes and shift cancellations, and
add process requirements (for example, consultation obligations when major changes occur).

Because Awards can be detailed, it’s important to identify the correct Award coverage early and then check what it says about termination and notice.

3) The Employment Contract

Your employment contract can set notice periods, but it generally can’t provide less than the minimum legal entitlements that apply (for example, the NES minimums). A contract can, however, provide more generous notice, and this can be a practical tool for roles where continuity matters (like key managers or client-facing roles).

If you don’t have tailored contracts in place, you may want to consider putting consistent documentation in place, such as an Employment Contract that clearly sets expectations around termination, handover, confidentiality and property return.

4) Workplace Policies And “Custom And Practice”

Policies aren’t usually the primary source of a notice period (contracts and legislation are stronger), but your policies can influence how notice is operationalised.

For example, a policy might set out:

handover requirements,
return of company property,
privacy and data access rules, and
how you manage paid out notice or garden leave.

In some workplaces, a consistent “custom and practice” approach can also shape expectations. That’s why consistency matters-if you always let people leave immediately without any process, it can be difficult to suddenly enforce a strict approach without pushback.

Employer Notice Periods: When You Terminate Employment

When you, as the employer, end employment (other than in some cases of serious misconduct), you’ll generally need to provide:

written notice of termination (or at least clearly communicate termination), and
the correct notice period (or payment in lieu), and
any final entitlements (like accrued annual leave).

For small business owners, the practical challenge is usually timing: you may need the role to end quickly, but the law often requires notice or a payout.

Can You Pay Notice Out Instead Of Having The Employee Work It?

Often, yes. This is commonly called payment in lieu of notice. Instead of requiring the employee to work through the notice period, you pay what they would have earned during that time (based on their base rate and what the contract/Award requires).

Payment in lieu can make sense where:

the employee is leaving on poor terms and you want to reduce workplace disruption,
there are client relationship or confidentiality concerns, or
you need to restructure quickly.

However, you’ll want to handle this carefully. The details matter, including what counts as “ordinary pay,” whether allowances or loadings apply, and how superannuation and tax are treated for different payments. If you’re unsure, it’s worth confirming with your payroll provider and/or accountant.

If you want a deeper overview of this concept, the payment in lieu of notice explanation is a helpful starting point.

When You Might Not Need To Give Notice (Serious Misconduct)

In some situations involving serious misconduct, termination may occur without notice (summary dismissal). This is an area where small errors can become expensive, especially if the employee challenges the reason or the process used.

Even if you believe misconduct has occurred, it’s still important to follow a fair process, document what happened, and make sure you’ve considered whether suspension or investigation is appropriate before termination.

For example, some employers choose to pause things while they gather information. Depending on the circumstances, standing down an employee pending investigation may be relevant (but it must be handled carefully, and the rules depend on your legal instruments and the reason for the stand down).

What About Probation?

Probation often creates confusion. Probation is not a “free pass” to terminate without risk. Notice obligations can still apply, and other risks (like general protections claims) can still arise.

Practically, probation should be managed with:

clear performance expectations,
regular feedback and documentation, and
contract terms that align with minimum legal obligations.

If you’re planning to end employment early in the relationship, it’s worth understanding the compliance landscape around termination during probation.

Employee Notice Periods: When They Resign (And What You Can Do)

Employees can also be required to give notice when they resign, but the source of that requirement matters.

An employee’s resignation notice period might come from:

their Modern Award or enterprise agreement, and/or
their employment contract.

As an employer, you’ll usually be most concerned with two practical questions:

How long must they stay?
What happens if they want to leave immediately?

Can You Refuse A Resignation?

In most cases, you can’t “refuse” a resignation in the sense of forcing someone to remain employed indefinitely. But you can generally require them to comply with any applicable notice requirements (subject to the Award/contract and the circumstances).

That said, employment is a relationship. In practice, if the employee is disengaged or leaving for personal reasons, forcing them to stay can create operational and cultural problems.

A common approach is to negotiate an agreed end date and document it, including what will happen with handover, return of property, and final pay.

Can You Require The Employee To Work Their Notice Period?

Often, yes-if they are still employed during the notice period, they’re generally expected to work as directed, provided directions are lawful and reasonable and you continue to pay them correctly.

However, you might decide it’s better not to have them attend work for all or part of the notice period. Options can include:

Paying out notice and ending employment earlier,
Directing annual leave during the notice period (only if permitted under the applicable rules), or
Garden leave (where the employee remains employed and paid but does not attend work-typically this is easier to manage where your contract (and any Award/enterprise agreement terms) supports it).

Be careful with “annual leave during notice” decisions. There are legal rules around directing leave and when it’s reasonable, and Awards can be prescriptive. If your situation involves leave balances and resignation timing, it can help to understand the common issues around annual leave on resignation.

What If The Employee Doesn’t Give The Required Notice?

This is where many small businesses get stuck. If an employee resigns effective immediately and walks out, you’ll want to check:

what notice they were required to give under the Award/contract,
whether there is any lawful basis to withhold or deduct money, and
whether there are any practical risks in escalating the dispute.

In some Award-covered contexts, there may be a limited ability to deduct up to a week’s wages from amounts due if the employee doesn’t give the required notice. But this depends on the specific Award terms and the employee’s circumstances, and it’s not a blanket rule across all employees. Deductions from wages are heavily regulated.

As a general principle, you shouldn’t assume you can “just deduct” money from final pay unless there’s a clear legal basis to do so (such as a specific Award term or a written authorisation that is valid under workplace laws). If you’re unsure, it’s safer to get advice before processing final pay.

Common Notice Period Scenarios (And How To Handle Them Without Headaches)

Knowing what the notice period is in theory is one thing. Applying it in real life-especially in a fast-moving small business-is where things get tricky. Here are some of the situations we commonly see.

Scenario 1: You Want The Employee Gone Immediately

If you terminate someone and want them to leave immediately (for example, due to performance concerns, conflict, or risk to the business), you will usually be looking at payment in lieu of notice.

As a practical checklist, you’ll want to:

confirm the correct minimum notice period (NES/Award/contract),
calculate the payout correctly (including any required components),
provide written confirmation of the termination and payout, and
finalise return of property and access (keys, devices, logins).

Also consider whether post-employment restraints or confidentiality clauses apply. If your contract documents aren’t clear, it may be time to refresh them.

Scenario 2: The Employee Is On Sick Leave During Their Notice Period

Sometimes an employee resigns or is given notice, and then takes personal/carer’s leave. This can raise questions like:

Can they use sick leave during their notice period?
Does sick leave extend the notice period?
What evidence can you request?

The answers depend on the circumstances, but as a general guide, employees can generally access entitlements during employment if they meet the requirements, and notice periods don’t automatically “pause” just because someone is unwell. Evidence requirements can also vary.

Scenario 3: Changing Rosters Or Shifts During The Notice Period

If an employee is working through their notice period, you might want to change rosters to manage handover, reduce costs, or cover operational needs. But roster changes can trigger Award rules around notice of shift changes, minimum engagement, and cancellation notice.

If your workforce is roster-based, make sure you also keep an eye on the general compliance expectations around employee rostering, especially when you’re making changes quickly around someone’s departure.

Scenario 4: The Employee Asks To Reduce Their Notice Period

Employees often ask to leave early to start a new role, relocate, or handle personal commitments. From an employer perspective, it can be reasonable to agree-if it suits your business.

If you do agree, it’s a good idea to:

confirm the agreed final date in writing,
confirm what happens with final pay and any leave, and
ensure there’s a plan for handover and return of company property.

This doesn’t need to be complicated, but it does need to be clear.

How To Set Notice Periods Up Properly In Your Contracts (So You’re Not Scrambling Later)

Many notice period disputes happen because expectations weren’t set upfront. The most practical step you can take as an employer is to ensure your contracts and workplace documentation are aligned with how your business actually operates.

Here are some contract and documentation points to consider.

Set A Clear Notice Clause (That Meets Minimum Standards)

Your employment contracts should clearly state:

the notice period required by the employee if they resign,
the notice period you will provide if you terminate (or a reference to the applicable minimums), and
your ability to provide payment in lieu of notice (where appropriate).

This is where a tailored Employment Contract can save you a lot of time later-especially if you employ staff across different roles (admin, retail, service delivery) with different operational needs.

Include Practical Exit Obligations

Notice is not just about time. It’s also about protecting the business during transition. Many employers include clauses covering:

handover of work and status updates,
return of equipment and company property,
confidentiality and client information, and
restrictions on misuse of business data.

These clauses need to be drafted carefully to be enforceable and to match the role. What’s “reasonable” for a senior employee with access to sensitive information can be different from what’s reasonable for an entry-level role.

Have The Right Policies In Place

While policies don’t replace contracts, they support consistent processes. For example, you may want policies around:

IT and device use (including access removal on exit),
leave approval and evidence requirements,
workplace conduct and investigations, and
communications with clients after a staff member exits.

Consistent policies also help you show you acted fairly if a termination is later challenged.

Train Your Managers On The Basics

In small businesses, terminations and resignations are often handled by owners or line managers rather than a dedicated HR team. A simple internal checklist can prevent mistakes, such as:

confirming Award coverage,
checking contract notice clauses,
issuing written notice and final pay details, and
documenting key conversations.

If you’re growing, this kind of process becomes a risk management tool-not bureaucracy.

Key Takeaways

What is the notice period? It’s the time between giving notice that employment will end and the employee’s final day, and it affects staffing, cost, and legal risk for your business.
In Australia, notice periods can come from the National Employment Standards (NES), a Modern Award or enterprise agreement, and your employment contract-so you need to identify the correct source for each employee.
As an employer, you can often use payment in lieu of notice to end employment earlier, but the amount should be calculated carefully and documented clearly.
When employees resign, their notice obligations depend on their Award and/or contract, and you should be cautious about withholding or deducting amounts from final pay unless there’s a clear legal basis.
Common notice period issues include sick leave during notice, roster changes, early release requests, and immediate exits-each needs a practical plan and consistent documentation.
Clear, compliant contracts and policies (including a well-drafted notice clause and exit obligations) help you avoid disputes and keep operations running smoothly.

If you’d like help setting compliant notice period clauses and exit processes for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

Official Sources to Check

Rules and regulator guidance can change. Check the current official material most relevant to this issue before relying on the article:

Notice Periods in Australia: Employer Rules and Requirements