The Importance of Staff Retention

Many companies are now beginning to view employee retention as a critical issue. High Employee turnover increases expenses and can also have negative effects on company morale.

Implementing strategies devised to retain good workers can help counterbalance replacement costs and reduce the indirect costs associated with high staff turnover such as lost clients and loss of morale.

Employee retention has become an important topic for many reasons.

These include:

• Social media networking tools such as LinkedIn make it easy to observe new job opportunities or get poached by another company
• Costs associated with hiring new staff, advertising, interviewing and hiring etc.
• Training new staff
• Loss of productivity. It can take up to 2 years for a new staff member to reach the same productivity levels as existing staff members
• Loss of engagement. Retained employees who see a high turnover often get disheartened and lose engagement

The longer staff stay with an organisation, the more productive they get .They get to know the systems, products and learn how to work together as a team.

Many high performing companies have loyal employees and each company has its own strategies for retaining their employees.

Some of the interesting things to consider:

• Compensation is a factor but does not play as big a role as you would think. Over-compensation will not offset a poor work environment
• Job fit is significantly important. Hiring the right people for the right positions by realistically advertising job positions will save you a lot of trouble in the long run. If you oversell a job you can suffer from high staff turnover. Effective retention strategies often begin during the employee recruitment process. Employees are more inclined to remain with a company that fulfils the promises made when their employment offer was extended. Companies that provide a realistic view of their corporate environment, advancement opportunities and job expectations to new hires can positively influence employee retention
• The work environment and culture matter. Staff want to feel appreciated, comfortable and included in their place of work. Employees that enjoy what they do and the atmosphere in which they work are more likely to remain employed with their company

Implementing an employee retention program is an effective way of making sure key workers remain employed while maintaining job performance and productivity.


In the end the most prosperous organisations are those that respect their employees and invest in building an engaged work place environment.

How much notice must you give before Dismissing an Employee?

When an employee is being dismissed, notice must be given. The notice starts when the employer tells the employee that they want to terminate the employment. Notice ends on the last day of employment.

The length of notice an employee must be given is determined by how long they have worked for you and their type of employment. If someone has worked for you continuously for over one year but less than three you must provide a minimum of two weeks’ notice.

An employer must give the following notice periods when terminating an employee;

• Less than 1 year’s employment - 1 weeks’ notice.
• 1-3 years employment - 2 weeks’ notice
• 3-5 years employment - 3 weeks’ notice
• Over 5 year’s employment – 4 weeks’ notice.

An employee is entitled to receive an extra week of notice if they are over 45 years old and have worked for the employer for a minimum of 2 years.

Sometimes an award, registered agreement or employment contract can specify longer minimum notice periods.

If a registered agreement has been put in place, check the terms of the agreement for the correct amount of due notice.

The minimum amount of notice an employer must provide is determined by the length of the employees continued service with them. Continuous service is the length of time an employee is employed by a business. Service does not include unpaid leave, with the exception of unpaid parental leave which does count as service towards notice of termination.

An employer may provide more notice than they are obligated to in the award, registered agreement or contract. The employee is only required to work out the minimum notice period although they are able to work out the extra notice if they choose to do so.

An employee is entitled to take annual leave during a notice period if the employer consents to the leave.

An employee may also take sick leave during a notice period if they provide notice of the leave as soon as possible and evidence (medical certificate ) if required.

If an employee has used up all of their sick leave they may take unpaid sick leave. They will still have to provide notice and evidence if required.

An employee cannot be forced to take leave as part of their notice period.

An employer can also provide payment as a replacement for notice, which can be equal to or exceed the total amount the individual would have been paid for the required amount of notice.

Redundancy Entitlements Exceptions

There are some circumstances where an employee whose job may have been made redundant will not be entitled to redundancy pay.

These circumstances are:

• The employee hands in their resignation without having an agreement in place with the employer to make a redundancy payment on termination.
• An employee is terminated due to misconduct or other reasons associated with the employees own performance or ability to do the job.
• The employer acquires other adequate employment for the employee.
• The employee has been employed for a period less than 12 months.
• The employee works for a small business. A business is considered to be a small business if the employer has less than 15 staff members.
• The employee had a contract or was employed for a fixed period of time that has come to an end.
• The employee was employed for an identified task or project.
• The employee is a trainee engaged only for the length of the training agreement.
• The employee is an apprentice.
• The employee was employed for a particular season.
• An employee was hired as a casual employee whose casual service is no longer needed.
• In a transfer of employment circumstance where it is proposed to transfer the employee to employment with a new employer.
• The employer is unable to pay the employee. This exception can only apply where Fair Work Australia relieves the employer from their redundancy pay obligations.

It is important to state that in a situation where an employee may not be entitled to redundancy pay, the employer will still be obligated to give notice, unless the employee has resigned or has been terminated due to serious misconduct.

Minimum notice periods.
An employer is obligated to give the following minimum notice periods when dismissing an employee:

Period of continuous service	Minimum notice period
Less than 1 year	1 week
1-3 years	2 weeks
3-5 years	3 weeks
over 5 years	4 weeks

An employee is entitled to an extra week of notice if they are over 45 years old and have worked for the employer for at least 2 years.

An award, registered agreement or employment contract can set out longer minimum notice periods, for example, 1 month as opposed to 1 week.