Workplace Fairness? Handling Pay for Employee Resignations


Do Voluntary Resignations Require Advance Notice?

Employee Resignations

As an employer, you are always under pressure to manage costs effectively.  Few companies willingly spend a penny more than necessary.

Controlling payroll costs make it imperative to know how to handle the times when an employee resigns. Some companies require two weeks’ notice of resignation, and you will pay them for the entire two weeks, even if the company lets the employee go prior to the two weeks.

It might be easier—and less costly— to pay for the full two-week notice period, when requesting an employee to give advance notice.

Can employees be required to provide two weeks’ notice of a resignation? What happens when releasing the employee prior to the conclusion of the two-week notice period?  Is the company obliged to pay the employee for the entire two weeks? What if it is only a request, but not required?

 If companies require employees to give any notice as opposed to requesting notice, they may have to pay for the full two-week period. This may include asking an employee to terminate service prior to the completion of the notice period.

For an orderly transition, most employers will ask (or require) that workers give advance written notice of an intention to resign. The period may vary, depending on what type of position. Two weeks are a traditional notice for most positions, but in some cases, four weeks may better, especially for senior management.

State laws may regulate much of what happens when an employee leaves before the end of a resignation period.

No matter what period of time a business specifies, it is the way companies define resignation notices that are relevant. In some states, the requirement that employees provide a certain amount of notice for resignation might create an implied contract; that will compel the company to afford an equal amount of notice before they terminate employees.

Therefore, in those states, requiring notice of a resignation, and then terminating the employee earlier, the law may require a company to pay the employee for the remainder of the termination notice period.

In addition, they might even realize they have to give a similar notice to any employee the company decides to fire. As a result, it is common to see a request for notice from resigning employees, instead of a requirement.  That approach makes it more economical to prevent possible contract claims.

Even when requesting two weeks’ resignation notice, a company should be prepared to for the whole stretch when deciding to terminate the employee early. Companies might have legitimate reasons for requesting the employee to stop working immediately—things like about security, reduced employee loyalty and productivity. It makes good sense for employers to pay for the full notice period, even without the contractual obligation that requires payment.

There are two reasons to pay voluntarily for a notice period:

  • The employee is asked to leave without pay after the resignation notice. This situation turns a voluntary resignation into an involuntary termination; potentially making the employee eligible for state unemployment compensation.
  • More importantly, termination without pay sends a negative message to the remaining workforce. The employee does what is expected, even reasonable, and what they see in return is punishment. This is not only a real morale buster, but you can forget about receiving many advance notices of intended resignations. 

To keep things fair and reasonable, a company should just pay the employee for the given notice period. This will prevent questions about unemployment eligibility, implied contract violations and worsening the morale of remaining employees. This also encourages those employees resigning in the future to give the company proper notice. It is only fair!

 

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