An Employee has resigned……..arrgggghhh – now what?

While many employees return to the office energized and refreshed for the new year, there is a minority where the new year break has crystalised or increased their dissatisfaction with their current roles.

It is not uncommon for frontline Managers to return in the new year and find that they are faced with a request for a meeting by an employee, where the employee immediately hands in a letter of resignation, or increasingly in this day and age an email is sent directly to your HR manager.

Often such circumstances come as a complete surprise to the manager, in other occasions it is not entirely unexpected. Still in both cases, the business is facing the hurdle and costs of recruitment, training and restabilising the business whilst faced with the employee’s sudden departure.

Frustration can be heightened by a staff member who refuses to work out any notice period and has essentially packed their desk and is on their way to the carpark. 

Here are 6 helpful points for Employers and HR and a cautionary note to help navigate this awkward situation.  

Resignation. What are the requirements?

Resignation is the termination of employment initiated by the employee. That is, the employee voluntarily decides to end their employment and clearly communicates that decision to the employer.  Usually written notice is provided in writing by the employee via a letter (or email) to their employer.

Tip 1 – Do I have to accept the resignation?

An employer doesn’t have the choice to accept or reject an employee’s resignation.   It’s a decision made voluntarily by the employee.  However, its best practice to acknowledge receipt of the resignation notice only after your certain the employee has unequivocally provided their notice (and preferably in writing). 

Usually, once an employee has provided their notice of resignation, the employee will work their usual hours until the end of the notice period, where their employment then concludes.

Tip 2 – Be careful of the Upset employee and the Heat of the Moment Resignation

Resignation by an employee could be ineffective if provided in the “heat of the moment” or in situations where the employee was under a state of emotional stress or mental confusion. In saying this, it is a very high bar – the employee would need to establish they felt forced to resign.  

In such circumstances, the employer can be exposed to a claim for unfair dismissal – with the employer arguing that their termination was at the initiative of the employer under subsection 386(2) of the Fair Work Act.

386 Meaning of dismissed

(1)

A person has been dismissed if:

  • the person’s employment with his or her employer has been terminated on the employer’s initiative; or
  • the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.


We have previously commented on the resignation in the heat of the moment in previous articles:

When Is A Resignation Really A Resignation – Our Top 3 Tips For Employers

Can An Employee Who Resigned Bring An Action For Unfair Dismissal? 3 Tips Employers Need To Know About Resignations During Performance Management

The requirements of what amounts to the term “forced to do so, because of conduct, or a course of conduct, engaged in his by his employer” in section 386(1)(b) have been interpreted fairly widely.  Where an employee resigns in obviously a distressed or upset manner, there is significant risk in simply accepting a resignation on the spot.

In Bupa Aged Care Australia Pty Ltd t/a Bupa Aged Care Mosman v Shahin Tavassoli (2017) 271 IR 245;  the Full Bench held that:

There may be a dismissal within the first limb of the definition in s 386(1)(a) where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign. Although “jostling” by the employer may contribute to the resignation being legally ineffective, employer conduct is not a necessary element. In this situation if the employer simply treats the ostensible resignation as terminating the employment rather than clarifying or confirming with the employee after a reasonable time that the employee genuinely intended to resign, this may be characterised as a termination of the employment at the initiative of the employer.

And a more recent example can be found in Rodney Harvey v Valentine Hydrotherapy Pools Inc [2021] FWC 3373 (10 June 2021)

This decision involved an employee who had a history of having a tense relationship with his Employer’s management committee.  After a dispute over payment of alleged underpayment of wages, the employee had said he was resigning and would hand in his notice the next day.  However, when the employee returned to work the next day, he did not provide written notice and clearly had no intention of resigning. However, prior to the starting his shift the employer had sent an email to the employee advising the employer had accepted his resignation. On these facts and after a careful examination of the events that surrounded the employee making such statement to his employer, it was found that the employer, when “accepting the resignation” had in fact terminated the employment relationship at the employer’s initiative. The dismissal was found to be both harsh and unreasonable and the employee was awarded compensation of $2,778.21 which was the equivalent of four (4) weeks wages.

As you can see, best practice for an employer who finds themselves in such a situation, is for the employer to allow an employee to “cool off” and invite them to reconsider whether their resignation should be provided. 

In such circumstances, its also a sensible approach to allow an employee some breathing space prior to acknowledging their resignation.  This is particularly helpful if it’s a personal matter driving their resignation or offer to reengage in further discussion if it’s a workplace issue that’s the driving force behind the employee’s decision. 

TIP 3 – Take Extensive Written notes

Where possible, an employer should seek to establish the reasons behind an employee’s decision to resign. Good note keeping practices can save an employer a lot of heartache in the event that the employee seeks to assert that they had no choice but to resign at a later date.  By keeping adequate records of the meeting (in particular detailing what was said around the reasons for resignation) you will have a contemporaneous note that could be used in the future to demonstrate to the FWC or a Court the evidentiary background to support a voluntary resignation as opposed to one in which the employee felt they were forced to resign. 

TIP 4 – What Notice Period is required?

Section 117 of the Fair Work Act sets out only the minimum period of notice that must be provided by an employer to terminate an employee’s employment.

Most awards and employment contracts will specify the necessary notice period required to be given.  Check the employment contracts or industrial instruments (such as awards or certified agreements).

TIP 5 – Payment in Lieu of Notice of Termination.

It is best practice to ensure your written contracts (or industrial instruments) always to allow for an employer to pay wages in lieu of all or part of an employee’s notice entitlement.

Employers need to be careful about seeking to make payment in lieu of notice where the contract or award is silent as to an employer’s right to make  payment in lieu.  If there is no provision in the contract or industrial instrument which permits the employer to elect to pay all or part of the notice period then the employer will need to obtain the employee’s agreement to do so. 

If the employer pays out the notice period, the employee’s employment ends on the date that payment in lieu of notice is made. In that case, the employee doesn’t stay employed during the notice period (or continue to accrue entitlements, such as annual leave).

If the employer doesn’t pay out any part of the notice period, the employee stays employed for the entire notice period.

Tip 6 – What about when an employee gives more Notice than required?

An employee can give more notice than what is outlined in the applicable award, registered agreement or contract.

However, an employer does not have to accept this and the employer may direct the employee to only work the notice period set out in the employment contract or industrial instrument.

In a nutshell the top 6 points are:

  1. Resignation must be accepted, that is, an Employer has no right to continue forcing the employee to work beyond their resignation save for the notice period
  2. Carefully consider heat of the moment resignations
  3. Keep extensive written notes of conversations around the resignation
  4. Notice periods required can be found under legislation, contract and industrial instruments
  5. Payment in lieu of notice (if need ensure your contracts of employment reflect the ability to do so)
  6. An employee giving more notice than required does not need to be accepted

There are a number of other issues to consider such as:

  • Exit interviews
  • A review of the position and responsibilities
  • Recruitment opportunities
  • Knowledge transfer
  • Confidential information, restraint of trade and intellectual property protection
  • Security risks
  • IT and cyber security risks
  • Recovery of company equipment

NB Lawyers – Lawyers for Employers undertake and offer an obligation free consultation – we are happy to help. 

Reach out via service@nb-lawyers.com.au or +61 (07) 3876 5111 to book an appointment. 

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Written By  

Jonathan Mamaril  

Director 

NB Lawyers – Lawyers for Employers  

jonathanm@nb-lawyers.com.au  

+61 (07) 3876 5111 

Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.

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