Are You Entitled to Resignation Notice Pay?

Man with packed box ready to leave office
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Here’s a common situation faced by employees: they decide to resign from a job and give two weeks notice. They assume they’ll be paid up to the last day of work, but the boss asks them to leave on the day they handed in the letter of resignation. Management might do this for several reasons:

  • To protect company interests such as confidential data and client lists

  • To minimize effects of the departure on employee loyalty and productivity

  • To prevent rumors and gossip from spreading

If a company ends the contract before the two-week notice period is up, is the employee still entitled to full pay?

State labor laws differ with regards to notice-period compensation. In most cases, employers pay for the days employees work and not for days employees intend to work. The exception to this rule is when employment contracts, policy manuals, or collective bargaining agreements contain specific clauses on resignation pay and notice. Then employers and employees must abide by the policies they signed on.

Without a formal agreement, the employer doesn’t legally have to pay the worker for the notice period. That’s regardless of whether the worker hands in a resignation letter two weeks in advance and the employer terminates them on the same day.

Voluntary Employer Payments

Even in the absence of a formal agreement, some employers pay for the two-week notice period when they end the worker’s contract early.

That’s because they don’t want to affect staff morale. Dismissal of a worker without pay before the notice period ends doesn’t send the right message. And it doesn’t foster employee loyalty.

When a company terminates a contract before the notice period ends, they turn a voluntary resignation into an involuntary termination.

The employee becomes entitled to state unemployment compensation, providing there were no just causes for the course of action. The company’s unemployment insurance (UI) reserve account and rates may see adverse effects as a result.

State Law and Resignation Pay

State law is another reason a company may pay the worker though they don’t perform any duties. This occurs when an employer actually stipulates that employees must give notice of resignation. This is often through clauses in their job contracts. In such cases, some state laws require the company to pay the worker through the notice period. To find out if your employer must issue resignation notice pay, contact your state’s department of labor

Advance Notice Periods

Most states in the US follow an at-will hiring policy. This means that companies can fire employees without cause and without notice. (Certain states observe exceptions to at-will hiring policy.) Workers can leave a company at any time without providing a reason or without notice too. The absence of contractual regulations absolves a company from the need to pay a worker.

If a worker volunteers a notice period, the company doesn’t need to offer compensation. And when a contract stipulates notice period but the worker offers to extend the duration, the company is under no obligation to agree to the extension or to increase final pay.

Other Considerations

Workers may hold back their intention to leave altogether. They could have witnessed management’s negative reactions to resignations in the past. Withholding notice means they will likely receive full pay up to the last day of work. But in the same way that employers consider the effects of dismissing staff without notice and pay, workers should consider the ramifications of their actions. In well-networked fields, a wrong step could make a lasting mark on reputations.

Conclusion

Whether an employee works through the notice period or not, they are entitled to pay they've already earned. This includes commissions and accrued vacation pay. They should be able to collect their final paycheck on their last day of work or soon thereafter. If you think that your employer deprived you of your right to resignation notice pay or any other final pay, consider consulting a lawyer.

Disclaimer: This article offers general information only and is not intended as legal advice. Neither the author nor publisher are engaged in rendering legal services. Please see an attorney for legal advice. Because laws vary by state and are subject to change at both the state and Federal levels, neither the author nor publisher guarantees the accuracy of this article. Should you act based on this information, you do so at your sole risk. Neither the author nor publisher shall have any liability arising from your decision to act on this information.