HR Practice For Payroll Practitioners

HR Practice for Payroll Practitioners

Resignation At any time, an employee can resign from their position. A standard clause in an employment agreement would state the notice period the employee has to give when they resign. The notice period is usually based on how long it could take to replace the position, start the recruitment process, keep the person away from competitors, or for other operational reasons. If the employment agreement does not mention a notice period, notice periods are based on what was agreed upon at the time of resignation or precedent set in the workplace (what notice has always been used) and even on the pay period. NZPPA suggests not setting a notice period greater than a week because if an employee wants to leave but is held in the workplace, they can do much damage on the way out. In addition, if the employer does want the employee to finish their employment without working out their notice, the payment in lieu would be based on the notice period. For instance, a three-month notice period would have to be paid out if the employer wanted the employer not to work out their notice. Please note: 1. The employee resigns and works out their notice period based on what was agreed in their employment agreement or based on the pay period (if no mention of notice has been included in the employment agreement). 2. The employee resigns and the employer wants the employee to leave straightaway and so pays the employee in lieu of notice. By doing this, the ex-employee can start working for another employer the very next day as the employer has paid out the obligation of notice. 3. The employee resigns, but the employer wants them to work out their notice at home (commonly known as garden leave). 4. The employee resigns but walks out and does not work their notice. In this case, the employer cannot deduct the notice period from the employee’s final pay unless the employee has given consent in the employment agreement. There are four variations on how an employee may resign (providing and not providing notice to their employer):

© New Zealand Payroll Practitioners Association, Sep 2024, Ver 12

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