Should Employees Work Out Their Notice Period?

When an employee resigns, employers often face a critical decision: should they require the employee to work out their notice period or let them leave immediately?

While it may seem like a simple yes-or-no question, the reality is more complex. There are legal considerations, business needs, and the overall impact on the team to take into account.

While notice periods exist to ensure a smooth transition, the question remains: does keeping a resigning employee on board benefit the business, or is it sometimes better to part ways early? Let’s break down everything you need to consider when making this decision.

Understanding Notice Periods and When They Apply

A notice period is the time between when an employee resigns (or is terminated) and when their employment officially ends. For permanent employees—whether full-time or part-time—notice periods are typically outlined in their employment contract or the relevant Modern Award, or The Fair Work Act.

The length of notice required generally depends on how long the employee has been with the company, ranging from one week for new employees to up to four weeks for long-term staff. In some cases, especially for senior and specialist roles, longer notice periods may apply.

Casual employees, on the other hand, are not required to give notice unless specifically stated in their contract. Likewise, employers are not obligated to provide notice when ending casual employment, as casual work does not come with guaranteed ongoing shifts.

A common misconception among employers is that notice periods only apply when an employee resigns. However, employers are also legally required to provide notice if they terminate an employee, except in cases of serious misconduct.

Do Employees Have a Say in Whether They Work Their Notice?

Legally speaking, if an employee’s contract or award requires a notice period, they are obligated to either work it or accept a payment in lieu. However, some employees may attempt to leave immediately despite this requirement.

If an employee refuses to work their notice, the employer may have the right to withhold part of their final pay—depending on what is outlined in their award or contract. However, forcing an employee to stay rarely leads to positive outcomes. Even if they do remain, their productivity and engagement are likely to decline, which can create further disruptions.

Should an Employee Work Their Notice?

Key Considerations

Deciding whether to require an employee to work out their notice is not always straightforward. There are advantages and disadvantages to both approaches, and the best choice depends on the circumstances surrounding the resignation.

One key benefit of having an employee complete their notice is continuity. If their role involves customer relationships, managing projects, or specific expertise, having them stay on allows for a structured handover. This can help prevent knowledge gaps and ensure a smoother transition for their replacement.

Additionally, allowing an employee to work their notice can reinforce a positive company culture. It shows other team members that departures are handled professionally and allows for proper goodbyes, helping maintain morale.

However, there are risks as well. Employees who have resigned may not be fully committed to their work, leading to decreased productivity or even mistakes. If they are moving to a competitor, keeping them around could pose a risk to your intellectual property. In some cases, an employee’s presence during their notice period could negatively impact the team, particularly if they are unhappy about leaving and spread negativity in the workplace.

When Paying Out the Notice Period Might Be the Better Option

There are several scenarios where paying an employee out rather than having them work their notice makes sense. If the employee is leaving on bad terms, struggling with motivation, or moving to a direct competitor, an immediate departure may be the best option.

Similarly, if the role does not require a significant handover, or the employee is unlikely to contribute much value during their notice period, paying them out can be a practical decision. In some cases, it may be better for workplace morale to part ways quickly rather than prolong an uncomfortable situation.

Another factor to consider is whether the employee has access to sensitive business information. If their role involves confidential data, financials, or client lists, keeping them in the business after they’ve resigned could pose security risks.

Some industries enforce gardening leave, where an employee is still technically employed and paid but is not required to attend work or complete tasks during their notice period. This approach allows businesses to maintain control over an employee’s departure while minimising risks.

How to Make the Right Decision

Each situation is unique, so employers should weigh the pros and cons before deciding whether an employee should work their notice period. Start by considering the nature of their role and whether a handover is necessary. If they are in a highly specialised position or have ongoing client relationships, having them complete their notice period may be beneficial.

However, if their work can be easily reassigned, or their departure could disrupt team dynamics, paying them out may be the better option. Consider the employee’s attitude as well. If they have been a valued team member and are leaving on good terms, their presence during the notice period could be positive. On the other hand, if they are disengaged or disgruntled, keeping them on may do more harm than good.

Employers should also take the time to check the terms of the employee’s contract and the relevant modern award before making a decision. If the contract states that notice must be worked unless otherwise agreed, then the employer has more flexibility. However, if there are specific terms about how notice periods must be handled, those need to be followed.

Managing the Notice Period Professionally

Regardless of whether an employee stays on or is paid out, how the situation is handled matters. Communicating clearly and professionally about the decision ensures that the transition is as smooth as possible. If the employee is required to work their notice, set clear expectations about their responsibilities during this period.

For those being paid out, ensure they understand how their final pay will be processed and provide written confirmation of their employment end date. Handling the departure with professionalism can help maintain a positive employer brand and leave the door open for potential future collaborations.

It’s also essential to think about the wider team. If an employee is leaving, their colleagues will likely have questions about how their departure affects workload and team structure. Being transparent and proactive about these changes helps prevent uncertainty and minimises disruption.

Final Thoughts

Notice periods are designed to provide stability during employee transitions, but they don’t always work in every situation. Employers have the right to decide whether an employee works their notice period or is paid out, but making the best choice requires careful consideration.

In many cases, a balanced approach works best. If the employee’s continued presence benefits the business and they remain engaged, having them work their notice can ensure a smooth transition.

However, if keeping them on presents risks or challenges, paying them out may be the smarter choice.

By assessing each situation individually and handling the process professionally, businesses can manage employee departures in a way that supports both the company and its team.

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