Ending an Employee’s Notice Period: Understanding the Implications

Employers often decide they don’t need an employee to work through their notice period, especially if the employee’s resignation is disruptive to the workplace. When this happens, employers may have the option to either pay the employee in lieu of notice or place them on “gardening leave” (where they’re not required to work but remain on the payroll until their notice period ends), depending on the terms of their employment contract.

In Egginton v Focus (NSW) Pty Limited [2024] FWC 1872, the Fair Work Commission (FWC) had to determine whether an employee agreed to end their notice period early or was dismissed by the employer.

Case Summary

The employee, who worked for a transport company, had a strained relationship with the employer. On 20 March 2024, the employee resigned, providing a month’s notice despite only being contractually obligated to give a week. Initially, the employer requested the employee work through the notice period. However, after the employee raised issues, including a bullying complaint, the situation deteriorated further.

On 28 March 2024, the company director suggested the employee end the notice period early. According to the employee, the director told him he could finish up and didn’t mention paying out the rest of the notice period. The employee claimed he wouldn’t have agreed to end early if he had known he wouldn’t be paid for the full notice.

The employer, on the other hand, argued the employee voluntarily chose to end the notice period. There was no discussion about whether the remaining notice period would be paid.

Fair Work Commission’s Findings

The FWC observed that while an employer and employee can agree to an early end to a notice period, both parties must have a clear understanding of what this means for payment and the notice period itself. Specifically, an employee should be able to choose to work out their notice with pay, or clearly understand that by leaving early, they forgo payment for the remainder.

In this case, the FWC held that the employee’s resignation could not be conclusively established because:

– There was no discussion about whether the employee would be paid for the balance of the notice period.
– The employee was not given a “real or effective” choice to continue working through the notice with pay.

The FWC ultimately decided that the employer’s call to the employee on 28 March 2024 effectively terminated the employment, or that the employee was forced to resign.

Key Takeaways for Employers

Employers should be cautious when ending a notice period early for an employee who has resigned. Employers can opt to pay out the notice period if they don’t wish the employee to work it, but the decision should be clearly communicated. If it’s the employee who wishes to leave early, there must be a mutual understanding that they will not be paid for the remaining notice period or they can work it out with pay.

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