When an employee resigns, it can feel a bit like being dumped.

One minute everything seems fine, the next minute you are staring at an email that begins with, “Please accept this as my formal resignation…”

Cue the questions.

What do I say?
What do I need to do next?
How much notice do they have to give? When do I pay them and what the heck do I pay them for?

Sadly, resignations are a normal part of running a business, but they can still catch small business owners off guard. The key is knowing the steps to take so the process stays professional, compliant, and relatively stress free.

Here is a practical guide to what happens next.

1. Confirm the Resignation in Writing

Even if the employee resigns verbally, always ask for it in writing. An email is perfectly acceptable.

This gives you a clear record of:

• The resignation date
• The employee’s final working day
• The notice period being given

Once you receive it, reply to acknowledge the resignation and confirm the last day of employment.

Short. Professional. Documented.

2. Check the Notice Period

Next, check the employee’s contract or the relevant award to confirm the required notice period.

Notice periods vary depending on:

• Length of service
• The employment contract
• The applicable award or agreement

If you are unsure what applies, the notice period calculator from the Fair Work Ombudsman can help clarify minimum requirements.

Some employees will work their full notice period. Others may request to finish earlier, or you may decide to pay out the notice period instead.

Either way, make sure the arrangement complies with Australian workplace laws.

3. Plan the Handover

When someone resigns, knowledge can walk straight out the door if you do not plan ahead.

Before their final day, organise a clear handover. This might include:

• Documenting processes
• Transferring files and passwords
• Training another team member
• Listing outstanding tasks or deadlines
• Reallocating work to ensure someone new understands the tasks

A good handover saves a lot of headaches later.

4. Calculate the Final Pay

This is where things can get tricky if you are not familiar with payroll rules.

Final pay generally includes:

• Wages up to the last day worked
• Any unused annual leave (if they are full time or part time)
• Long service leave, if applicable and there are different rules per state
• RDO, Time in Lieu, Overtime or allowances owing
• In Lieu of Notice – depending on if they are working their notice period

You will also need to keep in mind that you cannot deduct things from employees wages (such as negative annual leave balances) without express consent from the employee. Can’t stress enough how important that is to get it in writing.

According to the Fair Work Ombudsman, final pay should generally be processed within 7 days of the employee’s last day.
So keep in mind that might not be in line with your “regular” payrun cycle so you might need to do an unscheduled payrun to ensure you meet the required timeframe.

5. Process the Payroll Correctly

From a payroll perspective, there are a few key steps.

You will need to:

• Process the employee’s final pay through payroll
• Withhold the correct PAYG tax
• Make sure you physically pay the employee on time (yes, people do get this wrong !)
• Finalise the employee in Single Touch Payroll (STP) with the ATO

The ATO provides guidance on finalising employees in STP.

Finalising the employee ensures their income statement is marked as “tax ready”.

6. Remove Access and Update Systems

This step is often forgotten but very important.

Once employment ends, remember to:

• Remove access to accounting or payroll software (they can still have access to their own payslips, but not other business financial data)
• Disable email accounts or if you want to monitor them so no work slips through the cracks, change the passwords
• Collect keys, devices, or any other company property
• Update internal contact lists

It is not about mistrust. It is simply good business housekeeping.

7. Reflect and Move Forward

Resignations are also an opportunity to reflect.

Was the departure just normal career movement?
Could something improve in the workplace?
Is it time to restructure the role?

Even losing a great team member can create space for fresh ideas and new opportunities. So as hard as it is, look at this in a positive manner for the future of your business.

Running a Business Means Managing Change

Staff resignations are simply part of business life. Having a clear process in place makes the transition smoother for everyone involved.

And if the payroll calculations, leave payouts, or compliance side feels overwhelming, that is where having a good bookkeeper makes all the difference.

At Healthy Business Finances, we help small businesses stay on top of payroll, compliance, and all the moving parts behind the scenes. Because running your business is hard enough without trying to decode employment rules at the same time.