[Australia] Can employees negotiate an early exit from their contracts?

In Australia, long notice periods are becoming increasingly common for employees in senior or executive level positions or those with highly sought-after skills. Mondaq shares key information about notice periods and when an early exit might be a viable option.

It can be difficult for employees bound by extended timeframes to navigate how and when to leave a current role for a new opportunity, especially if their new or prospective employer wants them to start sooner.

Notice period

A notice period is the length of time an employee or employer must give to end the employment relationship. The notice period length is usually set out in an employment agreement, modern award or enterprise agreement and commences on the day after the notice is given by either party.

A 'reasonable notice' period may apply for employees whose contract does not stipulate a notice period. A reasonable notice period will depend on factors such as the employee's length of service, seniority, salary and age.

Must employees work their entire notice period?

When an employee resigns, their employer can:

• require them to work for the entire notice period;
• direct the employee not to attend work but remain employed ('gardening leave'); or
• pay the employee out in lieu of their notice period.

In general, Mondaq says employees are contractually obligated to work out their notice period; failure to do so could amount to a breach of contract. Sometimes, however, things are not that simple. It is important to check whether a modern award applies as this can impact whether or not a contractual notice period is enforceable.

An employee's contract may also specify whether their employer can withhold money owed to the employee if the required notice period is not provided.

Negotiating an early exit

Employees with lengthy notice periods - for example, three months - who have secured new work, might be seeking an earlier finish with their current employer. In these circumstances, it could be possible to negotiate an earlier end to the employment if both parties agree to waive the notice period.

Employers will ordinarily consider factors such as how long it will take to replace the employee and the amount of leave entitlement owed to the departing employee, to determine whether requiring them to work out the notice is in the business's best interests.

For employees wanting to negotiate a reduction in their notice period, Mondaq recommends a consultation with an experienced employment lawyer.

In Australia, long notice periods are becoming increasingly common for employees in senior or executive level positions or those with highly sought-after skills. Mondaq shares key information about notice periods and when an early exit might be a viable option.

It can be difficult for employees bound by extended timeframes to navigate how and when to leave a current role for a new opportunity, especially if their new or prospective employer wants them to start sooner.

Notice period

A notice period is the length of time an employee or employer must give to end the employment relationship. The notice period length is usually set out in an employment agreement, modern award or enterprise agreement and commences on the day after the notice is given by either party.

A 'reasonable notice' period may apply for employees whose contract does not stipulate a notice period. A reasonable notice period will depend on factors such as the employee's length of service, seniority, salary and age.

Must employees work their entire notice period?

When an employee resigns, their employer can:

• require them to work for the entire notice period;
• direct the employee not to attend work but remain employed ('gardening leave'); or
• pay the employee out in lieu of their notice period.

In general, Mondaq says employees are contractually obligated to work out their notice period; failure to do so could amount to a breach of contract. Sometimes, however, things are not that simple. It is important to check whether a modern award applies as this can impact whether or not a contractual notice period is enforceable.

An employee's contract may also specify whether their employer can withhold money owed to the employee if the required notice period is not provided.

Negotiating an early exit

Employees with lengthy notice periods - for example, three months - who have secured new work, might be seeking an earlier finish with their current employer. In these circumstances, it could be possible to negotiate an earlier end to the employment if both parties agree to waive the notice period.

Employers will ordinarily consider factors such as how long it will take to replace the employee and the amount of leave entitlement owed to the departing employee, to determine whether requiring them to work out the notice is in the business's best interests.

For employees wanting to negotiate a reduction in their notice period, Mondaq recommends a consultation with an experienced employment lawyer.