Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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When someone asks “what is your current notice period?”, they usually mean the amount of notice an employee (or you as the employer) has to give right now under their contract, award or the Fair Work Act.
As a small business, getting this right matters. The current notice period affects handovers, rostering, payroll, and legal risk if there’s a dispute about pay in lieu, leave, or whether someone must work out their time.
In this guide, we’ll break down how to set a lawful notice period, what to do when an employee resigns, how termination from your side works, and the day‑to‑day rules during the notice period. We’ll keep it clear and practical so you can manage transitions smoothly and stay compliant.
What Is A “Current Notice Period” For Your Business?
Your current notice period is the notice that applies to an employee at this moment, based on the strongest of three sources:
- Their Employment Contract
- Any applicable modern award or enterprise agreement
- The National Employment Standards (NES) under the Fair Work Act 2009 (Cth)
Practically, the current notice period is whichever source sets the highest standard for the situation. If your contract says 4 weeks, but the NES would only require 2 weeks, the contractual 4 weeks applies because it’s more generous to the employee.
If you need a refresher on the basics, this overview of employment notice periods in Australia explains how the pieces fit together for employers.
How To Set A Lawful Notice Period In Employment Contracts
It’s best practice to set clear notice terms in every Employment Contract. This gives certainty and reduces disputes later.
What Should Your Contract Say?
- Minimum notice for resignation by the employee (e.g. 2-4 weeks).
- Minimum notice for termination by the employer (align with or exceed the NES).
- Whether you can direct the employee to take garden leave or accept payment in lieu.
- How notice works during probation, if applicable (often shorter, but still reasonable and compliant).
- How accrued leave is handled at the end (e.g. payout of annual leave, not paying out personal/carer’s leave).
What Are The NES Minimums?
If you terminate someone’s employment, the NES sets minimum notice based on their continuous service:
- Not more than 1 year: 1 week
- More than 1 year to 3 years: 2 weeks
- More than 3 years to 5 years: 3 weeks
- More than 5 years: 4 weeks
- Plus 1 extra week if the employee is over 45 and has at least 2 years’ service
These minima apply when you terminate (not when an employee resigns). Awards or enterprise agreements can set different rules, and your contract can provide more than the minimum.
When you’re deciding your current company notice period, ensure the clause does not undercut the NES or an applicable award. If it does, the higher obligation wins anyway.
Why Consistency Matters
Different notice periods across your team can create rostering headaches and perceived unfairness. Many small businesses standardise employee resignation notice at 4 weeks for full‑timers (and shorter for casuals where applicable), and use the NES as a floor for terminations initiated by the business.
If you’re unsure how to structure your template, this step‑by‑step guide to calculating employee notice periods outlines the key decision points for employers.
Managing Resignations: What To Do When An Employee’s Current Notice Period Starts
When an employee resigns, the current notice period usually comes from the contract or award. Your first steps should be practical and documented.
Confirm The Details In Writing
- Acknowledge the resignation and the last working day based on the notice period.
- Confirm handover expectations, access to systems, confidentiality obligations, and return of property.
- Note how leave will be handled during the notice period.
Can You Require Them To Work The Notice?
Yes, generally you can. If attendance or performance is a risk, you may be able to place them on garden leave (staying employed and paid, but not working) if the contract allows. For knowledge‑sensitive roles, read about garden leave and build it into your contract terms up front.
What If They Don’t Work Their Notice?
Employees sometimes request a shorter notice or simply stop attending. Your options depend on what your contract and any award say:
- Agree to reduce the notice by mutual consent.
- Treat the resignation as effective immediately and consider a wage deduction only if a lawful clause allows it and it complies with the Fair Work Act (lawful, reasonable, and primarily for the employee’s benefit, or clearly permitted by an award/EA/legislation).
- Accept payment in lieu in rare negotiated situations (more common when the employer ends employment).
If a worker refuses to attend or perform, there are practical and legal steps to take; see this employer guide on employees not working their notice period.
Termination By You: Minimums, Payment In Lieu And Garden Leave
When you’re initiating termination, calculate the correct notice, decide whether the employee will work it, and plan a clean exit.
Choose Between Working Notice, Garden Leave Or Payment In Lieu
- Working Notice: The employee works to the end date and is paid as usual.
- Garden Leave: The employee remains employed and paid, but stays away from work to protect your business interests (requires contract support).
- Payment In Lieu: You end employment immediately and pay out the notice period instead of requiring work.
Payment in lieu is common where continued access poses a risk or where a quick separation is best. For rules and payroll treatment, see this employer guide on payment in lieu of notice.
How Much Do You Pay?
At a minimum, pay the employee their base rate for the notice period (plus any contractual entitlements). If you’re paying in lieu, it’s typically the amount they would have earned during the notice period.
Superannuation can be tricky. Some termination payments attract super and others don’t. To avoid costly errors, check the rules on payment in lieu and superannuation before processing payroll.
What About Serious Misconduct?
If an employee is dismissed for serious misconduct (for example, theft or fraud), the NES doesn’t require notice. However, make sure your investigation and process are sound, and consider seeking advice before relying on serious misconduct - getting this wrong can lead to unfair dismissal claims.
Leave, Sick Days And Working Hours During The Notice Period
The day‑to‑day rules during notice are a frequent source of confusion. Here are the common issues.
Annual Leave During Notice
Employees continue to accrue annual leave during notice if they’re working or on paid leave, and you generally must pay out any accrued, untaken annual leave at the end. Depending on the contract or award, you may direct an employee to take annual leave during notice if reasonable.
If you’re considering changes, such as a direction to take leave, check fairness and reasonableness first. For more detail, see managing annual leave on resignation.
Sick Leave And Medical Certificates
Employees remain entitled to paid personal/carer’s leave during notice (unless they’ve run out of accrual). You can request evidence in line with your policies and the award or agreement. These issues often arise when attendance dips after resignation - this sick leave during the notice period guide outlines your options.
Public Holidays, Overtime And Rosters
- Public holidays that fall during notice are paid as public holidays if the employee would normally work that day.
- Overtime and penalty rates continue to apply if the employee works during notice (check the award).
- Changing rosters during notice must still comply with consultation and minimum notice requirements in the award/agreement.
Confidentiality And Restraints
Notice periods are a high‑risk time for information leakage or solicitation. Make sure your contracts include confidentiality and post‑employment restraints that are reasonable and enforceable in your jurisdiction. Garden leave clauses are helpful here because you can cut access while keeping the person employed and bound by obligations.
Common Compliance Traps For Small Businesses (And How To Avoid Them)
1) Underpaying Notice Or Misreading The NES
Remember that NES notice is a minimum for employer‑initiated terminations. If your contract sets more generous notice, you must honour it. Always cross‑check with any applicable award to confirm if it changes the calculation.
2) No Clear Contract Terms
Ambiguity breeds disputes. Put clear notice, garden leave, confidentiality and return‑of‑property clauses in your template Employment Contract. This is also the place to specify resignation notice and whether you can make payment in lieu.
3) Not Planning The Exit
A rushed handover, unclear last day, or delayed termination letter can lead to confusion and payroll errors. Use a simple process:
- Written confirmation of notice and end date
- Handover plan (clients, passwords, files, equipment)
- Payroll checklist (final pay, leave payout, notice or payment in lieu)
- System access and property return
4) Assuming You Can Deduct Wages For Short Notice
Only make deductions if clearly permitted by an award/EA, legislation or the contract and they comply with the Fair Work Act. Otherwise, you risk an underpayment claim. When in doubt, seek advice or consider mutually agreeing a shorter notice without deductions.
5) Letting Performance Slide During Notice
If performance drops, address it quickly. Depending on your contract, you can direct the employee to take garden leave or proceed with payment in lieu of notice to end the relationship cleanly.
6) Handling Probation Incorrectly
Probationary employees often have a shorter notice period under their contracts, but you still need to follow a fair process and pay the correct final entitlements. If termination during probation is on the table, it’s wise to follow structured steps and double‑check your contract settings.
7) Forgetting Policies And Training
Your staff handbook and policies should explain resignation processes, evidence for absences, and return of property. A consistent approach helps managers respond the same way every time, reducing the risk of unfair treatment claims.
How To Communicate Notice Periods To Your Team
Clarity is everything when it comes to notice. A short, consistent message helps employees understand expectations and prevents friction when someone resigns.
- Include the notice clause in every contract, and highlight it at onboarding.
- Keep an internal guide: what “current notice period” means for casuals vs part‑timers vs full‑timers, and who to notify first.
- Train managers to respond to resignations with a standard acknowledgement and a handover template.
- Use a checklist at the end of employment for payroll, equipment, and system access.
Where you anticipate business risk (for example, sales and key client roles), deliberate use of garden leave and tighter confidentiality restrictions can reduce the chance of information loss during notice.
Key Takeaways
- Your current notice period is set by the contract, any award/EA, and the NES - apply the most generous lawful standard to the employee.
- Set clear, consistent contract clauses for resignation notice, employer notice, garden leave and payment in lieu to avoid disputes.
- When terminating, choose between working notice, garden leave or payment in lieu, and confirm the correct calculation and payroll treatment.
- During notice, employees keep key entitlements (like paid personal leave if accrued) and you should manage handover, access and confidentiality closely.
- Avoid common traps: underpaying notice, unclear contracts, unlawful deductions, and inconsistent manager responses.
- Have a simple, repeatable process for acknowledging resignations, planning handover, and finalising pay and entitlements.
If you’d like a consultation about setting or managing your current notice period, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
