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Managing Employees' Notice Period

Published 01 Oct 2014

No employment related legislation deals with giving notice of the intention of resignation. This condition of employment must be recorded and described in the Individual Employment Agreement (IEA) between Employer and Employee. This clause should contain the following.

  • The duration of the notice period to be worked varies and the normal practice in New Zealand is that the notice period may be from two weeks to four weeks or one month. Longer notice periods may be applicable in case of more senior and highly technical Employees.
  • A requirement that the notice of termination must be in writing.
  • An arrangement that the Employer has the right to pay the Employee in lieu of notice.
  • In case of an Employee not working out the required notice period, the Employer reserves the right to deduct an amount equal to the corresponding salary/wages cost of the notice period not worked from the Employee's final pay.

In case of only receiving verbal notice it would be reasonable and recommended to request the Employee to confirm it in writing. It is also sound practice to confirm receipt of the notice of termination in writing. This will greatly eliminate any grounds for misunderstanding at a later stage.

In the case of the absence of an IEA or such a clause in the agreement, it can be expected from the Employee to work out a reasonable notice period. This reasonable period will be determined by the length of service, seniority and technical expertise and general practice in similar roles. It is advisable that the Employer and Employee reach agreement in this regard and record it in writing.

For an IEA to be legally terminated, the required notice must be given and the agreed notice period must worked. Once notice is given by the Employee he or she cannot unilaterally withdraw the resignation. It is up to the Employer to accept the withdrawal. In such a case it is required to sign off on a new IEA or a variation on the previous IEA. The Employer is also not allowed to reject the notice of resignation.

Employers must manage the so called “emotional notice and resignation” with caution. The Employment Court has found that notice of resignation under stressful and adversarial circumstances may be invalid and not enforceable by the Employer. In such circumstances it is advisable to allow the Employee some time to cool down and regain their logical thoughts and discuss and confirm their intention to give notice of resignation.

Cancelling the notice period is also possible when the Employer and Employee are in agreement that it is not required to work out the agreed notice period or part of it. Such an agreement must be recorded in writing and clearly states that the Employee forfeits his or her wages or salary for the notice period not worked.

Employees quite often apply/request annual leave during the notice period and Employers are reluctant in granting annual leave. The only recourse that the Employer has in refusing this request is to ensure that the clause regulating annual leave is adequately worded. The usual wording is that the Employee must apply in advance (usually 4 weeks in case of one or more weeks' annual leave at a time) and the Employer has the right to deny this request. A fair and reasonable reason for this refusal would be that the Employee’s full time service is required to ensure that a well-structured and complete hand over and transfer of knowledge takes place.