An employee resignation does not end your legal obligations as an employer. From the moment the resignation lands, you owe the employee a correct final pay, you must handle notice lawfully, and you need to protect the business without crossing the line into forcing them out. Get the details wrong and a routine resignation can become an underpayment claim, an unfair dismissal application, or in the worst cases a criminal prosecution.
This guide sets out the obligations that apply when an employee resigns: confirming the resignation in writing, the notice the employee owes you, what must go into final pay, what you can and cannot deduct, handover and business protection, and what happens if you get any of it wrong.
Who these obligations apply to and what triggers them
The core obligations come from the Fair Work Act 2009 (Cth) (the Act) and its National Employment Standards (NES). They apply to national system employers, which covers most private sector businesses in Australia. If you employ staff, assume the Act applies to you unless you have specific advice to the contrary.
The trigger is simple: an employee tells you they are resigning. There is no legal requirement that the resignation be in writing, so a verbal resignation can be effective. That is exactly why what happens next matters.
Two thresholds change how the rules operate, so it is worth knowing where you sit:
- Small business: an employer with fewer than 15 employees at a particular time. Casual employees only count if they are engaged on a regular and systematic basis. Small businesses have different unfair dismissal eligibility rules and can rely on the Voluntary Small Business Wage Compliance Code if they underpay.
- Non-small business: 15 or more employees. Higher civil penalties and the newer underpayment penalty rules apply to this group.
The obligations below apply regardless of whether the employee is on probation, casual, or permanent. Probation does not remove minimum entitlements such as final pay and annual leave payout.
Confirm the resignation in writing
Your first obligation is administrative but it is the one that prevents most disputes. As soon as an employee resigns, confirm in writing:
- The resignation date: the day they gave notice.
- The proposed last day of work: whether they will work out the notice period or leave earlier.
- Notice arrangements: any period of leave they want to take during notice.
- Handover expectations: what you need them to do before they leave.
A short email reply confirming the last day is enough to start. This record matters because if the arrangement later breaks down, the written confirmation is what the Fair Work Commission and any court will look at first.
You cannot refuse a resignation. An employee who resigns is ending the employment on their initiative, and you generally cannot reject that and compel them to stay. What you can do is hold them to any notice obligation that applies, and manage the exit properly.
Notice: what the employee owes you
There is a common assumption that employees must always give two weeks notice. In fact, the NES does not set a fixed notice period for employees. Instead, s 118 of the Act allows modern awards and enterprise agreements to specify the notice an employee must give, and your employment contract can do the same. So the answer to "how much notice do they have to give" depends on the contract, award, or enterprise agreement that applies to that particular employee.
A few points to keep in mind:
- Casual employees: generally not required to give notice under their awards or contracts, though they may give some as a courtesy.
- Check before you assume: An employee covered by a modern award may have a notice term you are not aware of, and an enterprise agreement may differ again.
- Short notice or no notice: do not jump to withholding pay. Contact them promptly in writing, confirm whether they are resigning and their last day, and seek agreement on a handover. Abandonment of employment can amount to resignation by conduct, but that characterisation needs to be handled carefully, so get advice if the situation is messy or involves suspected misconduct.
Asking them to leave before their notice expires
You are allowed to bring the end date forward, but doing so has a legal consequence: once you end the employment early, the termination is on your initiative, and the NES notice obligations for employer-initiated termination are engaged. Under s 117 of the Act, you must give written notice of the termination day and provide at least the minimum period of notice, which rises with length of service (up to four weeks), or payment in lieu of notice of at least the same amount.
In practice, that means if you want a resigning employee out of the business immediately, the cleanest route is usually to agree on the earlier date and pay out the remaining notice. Document the arrangement in writing so it cannot later be argued that you dismissed them without notice, and check that the contract or award permits payment in lieu before relying on it.
Final pay: what you must include
Final pay is where most resignation mistakes happen, because it is easy to miss an entitlement when you are moving quickly. A correct final pay will usually include:
- Wages up to the last day: ordinary hours worked, plus any penalties, overtime, and allowances the award, agreement, or contract requires.
- Annual leave payout: under s 90(2) of the Act, if employment ends with untaken annual leave, you must pay the employee the amount that would have been payable had they taken the leave. Check whether the applicable award adds leave loading to that payout.
- Other accrued entitlements: any amounts the award, agreement, or contract requires on termination, such as particular allowances or accrued time off in lieu.
- Superannuation: superannuation guarantee of 11.5% of ordinary time earnings applies until 30 June 2025 and rises to 12% from 1 July 2025. Super is generally due on the usual quarterly cycle rather than in the final payslip, but it is still owed and must be paid on time, including on the final pay period's ordinary time earnings.
What does not get paid out
Unused personal/carer's leave (sick leave) is generally not paid out on resignation. There is no NES requirement to pay it, and most awards and agreements do not provide for it. The same usually applies to unpaid leave balances. Check the specific instrument, but do not assume sick leave is a final pay entitlement.
When final pay must be paid
The NES does not set a single national deadline for final pay. The timing can come from the award, the enterprise agreement, or the contract, so check what applies to that employee before the last day arrives. From a risk perspective, paying final entitlements promptly and providing a clear payslip breakdown is the cheapest insurance against a dispute.
What you can and cannot deduct from final pay
This is a high-risk area. The Act requires that wages and other amounts payable to an employee be paid in full in money. Any deduction must fall within one of the permitted categories in s 324 of the Act:
- Written authorisation: the deduction is authorised in writing by the employee and is principally for their benefit.
- Enterprise agreement authorisation.
- Award or Fair Work Commission order.
- A law or court order: That means you generally cannot deduct money from final pay because the employee failed to give enough notice, or because they have not returned a laptop or uniform. Deducting for those reasons is an unlawful deduction, and the employee can recover the amount plus penalties may apply. If an award or agreement purports to allow a deduction for something like shortfall of notice, note that certain deduction terms have no effect under the Act, so this is a situation where advice before you act is worthwhile.
Handover and protecting your business
During the notice period the employee is still employed and still being paid, so you can require them to perform their normal duties, including reasonable handover tasks. It is reasonable to ask for:
- Process documentation: recording current work status and how key tasks are done.
- Training: showing a replacement or team member how the role works.
- Return of property: laptops, keys, uniforms, cards, and access passes.
- Client transition: finalising or handing over client matters in an orderly way.
A short written handover checklist, agreed when the resignation is confirmed, with a mid-notice check-in and a final day check-in, keeps the process fair and structured.
Confidential information and restraints
The resignation becomes legally sensitive when the employee has access to client lists, pricing, financial data, intellectual property, or product plans. Your protections come from the contract, not from goodwill. Confidentiality clauses, intellectual property assignment, and post-employment restraints are enforceable only to the extent the contract provides for them, and restraints must be reasonable to hold up. If the contract is silent, your options are far more limited, which is why contracts should be reviewed before a resignation, not after.
Removing access and avoiding constructive dismissal
Removing system access early can be sensible for sensitive roles or staff moving to a competitor. Do it in a measured, consistent way, and reassign or supervise rather than freeze the employee out entirely. The reason for caution is that the Act treats a resignation as a dismissal if the employee was forced to resign by conduct of the employer under s 386(1)(b). That is called constructive dismissal, and it can expose you to an unfair dismissal application.
If the exit is treated as a dismissal, the employee generally needs at least six months service to claim unfair dismissal, or 12 months if you are a small business, and the application must be made to the Fair Work Commission within 21 days of the dismissal taking effect under s 394 of the Act. Conduct that looks like retaliation for resigning, or that pressures the employee into leaving, is precisely what creates that risk.
What happens if you get it wrong
The consequences of mishandling a resignation are more serious than they used to be:
- Underpayment enforcement: The Fair Work Ombudsman can investigate, issue compliance notices requiring you to calculate and pay amounts owed, and take you to court for back pay and penalties.
- Higher civil penalties: Since 27 February 2024, the maximum penalty for serious contraventions of the Act, including breaches of the NES and award obligations, has increased, with penalties up to five times the standard maximum for businesses with 15 or more employees. From 1 January 2025, an underpayment contravention by a non-small business can attract a maximum penalty of the greater of three times the underpayment value or the relevant penalty unit amount.
- Criminal wage theft: Since 1 January 2025, intentionally underpaying wages or entitlements can be a criminal offence. An individual convicted faces up to 10 years imprisonment and fines up to $1.82 million (or three times the underpayment, if higher). A company faces fines up to $9.1 million (or three times the underpayment, if higher). Honest mistakes are not an offence, and small businesses that comply with the Voluntary Small Business Wage Compliance Code are protected from referral for prosecution.
- Unfair dismissal remedies: If a forced resignation is found to be an unfair dismissal, the Commission can order reinstatement or compensation.
A compliance checklist for resignations
Work through these steps from the moment the resignation is confirmed:
- Confirm in writing: the resignation date, last day, and notice arrangements, by email at minimum.
- Identify the applicable instrument: contract, modern award, or enterprise agreement, and check the employee notice term and final pay timing.
- Calculate final pay deliberately: wages to the last day, annual leave payout under s 90(2), and any award allowances. Pay super on ordinary time earnings for the final period.
- Do not deduct: amounts for short notice or unreturned property unless you have confirmed the deduction is permitted under s 324.
- Agree a handover plan and a property return list: record both.
- Manage access removal: do so in a measured way that cannot be characterised as retaliation or forcing the resignation.
- Keep the records: all of the above, including the final payslip.
When to get legal help
Employment lawyers are not only for when things go wrong. A practitioner can review the contract and award before the last day, confirm the notice period and final pay items that apply to a specific employee, and advise on whether a proposed deduction or restraint is enforceable. Where a resignation has turned sour, a lawyer can help with a show cause process for suspected misconduct, negotiate the terms of an early exit, or respond to an unfair dismissal application within the 21-day window.
The resignation step most employers miss
Most resignation disputes do not start with bad intentions. They start with an unconfirmed verbal resignation, a final pay calculated from memory, and a contract that was never checked against the award. The single step that protects you from all three is to confirm the resignation in writing on the day it happens, before the employee leaves, and to check the award before you calculate the final pay. Do that and the notice, final pay, and handover obligations in this guide become straightforward to meet. If the resignation involves suspected misconduct, confidential information, or a move to a competitor, get advice before you respond, not after.