What if an employee refuses?
It’s a hot labour market right now and employees have more job opportunities than ever, making it easier for them to pack up and go elsewhere. Being left in the lurch is not funny and can seriously impact your business - especially when an employee refuses to work out their notice period.
So, what rights do you have if this happens to you?
First up, what is the notice period?
The notice period is the length of time from when an employee notifies you that their employment with you is ending up to their last day. This should be recorded in the Employment Agreement, but if not, fair, and reasonable notice is required to be given.
Refusing to work out their notice period
Let’s be clear. You cannot force an employee to show up to work. While it can be frustrating and cause problems for your business, it’s important to keep your cool. Having a calm, down to earth discussion up front is often all it takes to get your employee on the same page as you, and often the wisest course of action.
But, if you can’t come to an understanding, the silver lining is that you are not required to pay out the notice period they aren’t working.
What you can’t do
- You can’t withhold the employee’s pay, including any owing wages/salary for time they worked, and any owing entitlements like annual leave. Ever.
- You can’t make deductions from their final pay without their consent (get it in writing).
- You can’t decide to deduct the notice period they should have worked from wages owing (even if there is a ‘general wage deduction’ provision in the Employment Agreement).
The law
The Employment Relations Authority (ERA) has the power to order an employee to pay damages or a penalty for breaches of their employment agreement.
If the employee’s refusal to work out their notice causes a significant loss to your business, you can consider this option. The cost associated with this though could outweigh any damages awarded, and because all ERA decisions are published in a public record, it could affect your reputation as an employer.
No silver bullets
Currently, there’s not a lot of protection for employers when it comes to notice periods. But, setting clear expectations from the beginning, and including the notice period in the Employment Agreement, will help set you on the right path.