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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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employment

Resignation: How much notice do you have to give?

Key Takeaway

In New Zealand, the notice period an employee must give when resigning is primarily set out in their individual or collective employment agreement. If an agreement specifies a period, that is the required notice. The principle of good faith applies to the resignation process.

Resignation Notice Periods in New Zealand Employment Law

When an employee decides to resign from their position in New Zealand, the amount of notice they are required to give is an important aspect of their employment relationship. This notice period allows for an orderly transition for both the employee and the employer.

Determining the Notice Period

The notice period an employee must give when resigning is typically specified within their individual employment agreement, which is a contract between the employee and employer [Source: Employment Relations Act 2000, s 65 (establishing the requirement for individual employment agreements and their agreed terms)].

Similarly, if an employee is covered by a collective employment agreement, the notice period for resignation may be set out in that agreement [Source: Employment Relations Act 2000, s 67 (defining collective agreements)].

Employment agreements commonly include clauses detailing the length of notice required for both an employee's resignation and an employer's termination of employment. These periods are a term agreed upon by both parties at the outset of the employment relationship or during subsequent variations of the agreement.

If an employment agreement does not specify a notice period for resignation, and the parties cannot agree, the services available for resolving employment relationship problems can assist in reaching a resolution [Source: Employment Relations Act 2000, s 65(2)(f) and Part 9].

The Principle of Good Faith

The employment relationship in New Zealand is underpinned by the principle of good faith, which applies to all aspects of the relationship [Source: Employment Relations Act 2000, s 4]. This means that both the employee and the employer are expected to deal with each other openly, honestly, and without misleading or deceiving each other, including during the resignation process.

Obligations During the Notice Period

Unless otherwise agreed, an employee who has given notice of resignation is generally expected to continue working their regular duties for the duration of the agreed notice period. During this time, the employer remains obligated to pay the employee their usual wages or salary and provide their ordinary entitlements.

In some cases, an employment agreement may include provisions for 'payment in lieu of notice' (PILON) or 'garden leave'.

  • Payment in Lieu of Notice (PILON): This is a contractual term where an employer may choose to pay an employee for the notice period instead of requiring them to work it. The employment agreement usually specifies whether this option is available.
  • Garden Leave: This is a contractual arrangement where an employee is paid their normal salary and benefits during their notice period but is not required to attend work or perform duties. They may be restricted from certain activities, such as working for a competitor.

These arrangements are dependent on the specific terms agreed upon in the individual employment agreement.

Consequences of Not Working the Agreed Notice Period

If an employee resigns without giving the notice period specified in their employment agreement, or leaves before the notice period has concluded without the employer's agreement, this may be considered a breach of the employment agreement. While employers rarely pursue legal action for damages in such circumstances, they may be entitled to do so if they can demonstrate a loss directly caused by the employee's failure to provide adequate notice. Any final pay entitlements would generally be calculated up to the employee's last day worked.

Resolving Disputes

If a dispute arises concerning the notice period for resignation, or any other employment relationship problem, parties can seek assistance from the employment relationship problem resolution services. These services include mediation facilitated by the Ministry of Business, Innovation and Employment (MBIE), and if necessary, determinations by the Employment Relations Authority (ERA) or the Employment Court [Source: Employment Relations Act 2000, Part 9].

When to Seek Independent Legal Advice

Individuals seeking clarity on specific notice period requirements, the interpretation of clauses in their employment agreement, or advice regarding a dispute related to resignation should obtain independent legal advice. Information on employment law and dispute resolution is available from official government agencies such as Employment New Zealand. For free legal advice, individuals can contact Community Law Centres.

Key Resources