Ask HR: How to Handle Compensation for Early Resignations
It happens to every employer: an employee decides to leave the company. Sometimes, the employee leaves on great terms and finishes out a two-week notice. Other times, unfortunately, a manager may wish for the employee to leave right away. In the case of an involuntary early departure, when does compensation for the affected employee end?
Question:
We had an employee give his two weeks’ notice, but the manager decided to let him go immediately. We paid the employee through the last day he worked, but he claims he should be paid for the two weeks he had planned to work. What are the legal requirements here?
Answer from Jenny, HR Pro:
As long as you don’t have an employment contract with the employee, a collective bargaining agreement that applies to the employee, or a handbook policy that requires a certain period of notice, you may opt to accept his resignation early.
You do not have to pay the employee for the portion of the notice period during which he performed no work. So if he was a non-exempt (overtime-eligible) employee, you simply need to pay him for all time worked. And if he was an exempt employee, you only need to pay him his regular salary through his last day worked.
A final note: terminating the employee early without providing pay through the unworked notice period is legal, but it may affect the employee’s unemployment eligibility. The company will essentially be turning a voluntary resignation into an involuntary termination. Therefore, he may become eligible for some unemployment benefits.
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