Managing Employee Resignation During Parental Leave In New Zealand

If you run a small business, an employee resigning is never “ideal timing” - and a resignation that happens while someone is on parental leave can feel especially tricky.

You might be juggling cover arrangements, figuring out final pay, and trying to do the right thing legally (and humanly) while staying on top of day-to-day operations.

The good news is that, in most cases, you can manage a resignation during parental leave in a clear, compliant way - as long as you know what to check, what to document, and where the risks usually sit.

Below, we break down what a resignation during parental leave means for you as an employer in New Zealand, what you should do step-by-step, and the common mistakes to avoid.

What Does A “Parental Leave Resignation” Mean For Employers?

A resignation during parental leave is when an employee gives notice that they’re resigning while they’re on parental leave (or sometimes, they tell you they won’t be returning from parental leave).

From a practical standpoint, it raises a few immediate questions:

• Is the resignation valid if it’s given while they’re away from the workplace?
• How does notice work if they aren’t actively working?
• What do you pay out (annual leave, other entitlements, etc.)?
• What happens to their position and your temporary cover arrangement?

In New Zealand, parental leave and employment protections are governed by specific legislation (including the Parental Leave and Employment Protection Act 1987) and also interact with wider employment obligations (such as good faith obligations under the Employment Relations Act 2000 and leave entitlements under the Holidays Act 2003).

The key thing to remember: a resignation is generally still a resignation - but how you handle the process matters. You’ll want to ensure it’s clear, properly recorded, and dealt with consistently with the employee’s employment agreement and New Zealand employment law.

Is A Resignation During Parental Leave Allowed?

Yes. Employees can resign while on parental leave. There’s no blanket rule that says someone must return to work before they resign.

However, because parental leave comes with protections around role security and treatment, it’s smart to handle communications carefully and keep a good paper trail - especially if there’s any risk later of a claim that the resignation wasn’t genuine (for example, if they later allege they felt pressured to resign).

Does A Resignation Have To Be In Writing?

Often, employment agreements require resignations to be in writing. Even if yours doesn’t, it’s best practice to:

• ask for written confirmation (email is usually fine), and
• respond in writing acknowledging the resignation and confirming the last day of employment (based on notice requirements).

If you don’t already have clear notice and resignation requirements in place, it’s worth reviewing your Employment Contract so your process is consistent and defensible.

Step-By-Step: What To Do When An Employee Resigns On Parental Leave

When you get notice of a resignation during parental leave, try not to treat it as a “special case” emotionally - treat it as a standard resignation, with a couple of parental-leave-specific checks.

1) Acknowledge The Resignation (And Confirm It’s Voluntary)

Reply promptly and professionally. Your response should typically:

• acknowledge receipt of their resignation
• confirm you understand they are resigning voluntarily
• confirm the notice period required under their agreement
• propose (or confirm) their last day of employment
• confirm you’ll provide final pay information (and when)

If the resignation email is vague (e.g. “I don’t think I’m coming back”), clarify it. You can say something like: “Just to confirm, are you resigning from your position effective [date]?”

This isn’t about being pedantic - it’s about avoiding disputes later.

2) Check Their Notice Period (And Whether They Intend To Work It)

Notice usually comes from the employment agreement (or a workplace policy). The tricky bit is that if someone is on parental leave, they may not be “working” their notice in the usual sense.

What matters is:

• the resignation date (when notice is given and received), and
• the effective termination date (the last day of employment after the notice period).

In many cases, the employee will simply remain on leave until the employment ends. In other cases, they may offer to return for handover. Either approach can be workable - but get it clear and in writing.

If you want the employment to end earlier than the notice period, don’t do this informally. Ending employment early without agreement (or without correctly applying any payment-in-lieu right in the employment agreement) can create legal risk. If you’re considering paying out notice instead, read up on Payment In Lieu Of Notice and get tailored advice for your situation.

3) Confirm Whether Any Work Will Be Done During Parental Leave

Sometimes employees on parental leave agree to do limited work (for example, a handover, training, or attending a key meeting) before the termination date.

If they resign, clarify whether:

• they will still do any agreed work before the termination date, or
• those arrangements are cancelled.

Keep the conversation focused on practicalities and avoid any suggestion that they’re being pressured to return. Also be mindful that doing paid work during parental leave may have flow-on implications for payroll and (if applicable) paid parental leave arrangements - so it’s worth double-checking the setup before anyone performs work.

4) Calculate Final Pay Carefully (Annual Leave Is Often The Big One)

Final pay is one of the biggest risk areas for small businesses - not because employers are trying to do the wrong thing, but because leave calculations can be complex.

Common final pay components include:

• any wages/salary owing up to the termination date (if applicable)
• payment for unused annual leave
• any alternative holidays (if applicable)
• any other contractual entitlements (bonuses/commissions, if contractually earned)

Even though the employee has been away from work, they may still have annual leave entitlements to be paid out on termination. In New Zealand, final annual leave payments can depend on things like whether they have reached their next entitlement date, what leave has been taken, and what their gross earnings/average weekly earnings look like - which may be affected by unpaid parental leave.

If you’re unsure how annual leave interacts with the end of employment, it’s worth checking your obligations and process around leave management generally - including when (if ever) you can direct someone to take leave: Annual Leave Rules.

Tip: If you use payroll software or an accountant, still sanity-check the numbers and keep a clear record of how the final pay was calculated. If there’s a dispute later, your paper trail matters.

5) Document The Outcome And Close Out Access / Property

Even when someone is on parental leave, they may still have:

• laptop/phone or other company equipment
• software access and logins
• customer lists or sensitive information access

Make a plan for:

• equipment return (courier, drop-off, etc.)
• revoking system access
• reminding them of ongoing confidentiality obligations (if relevant)

This is also a good time to confirm where you’ll send final documents (payslips, and any payroll/tax information). If you’re unsure about the correct tax treatment or payroll processing, it’s best to check with your payroll provider or accountant.

Key Legal Risks When Managing Resignation During Parental Leave

Most resignations during parental leave are straightforward. The problems usually arise when communication is unclear, emotions are running high, or the business treats the resignation as an opportunity to “tidy up” other issues without following a proper process.

Here are the main risk areas to watch.

Risk 1: The Employee Later Claims They Were Pressured To Resign

If an employee later alleges they were pushed out (for example, they felt they had no real choice but to resign), things can escalate into a personal grievance territory.

As an employer, your best protection is to:

• keep communications neutral and respectful
• avoid comments that could be read as discouraging return to work
• confirm the resignation is voluntary and clearly documented

Also keep in mind your broader obligations as an employer to provide a safe and fair workplace - including your Duty Of Care obligations, which can shape how your policies and communications are viewed if a dispute arises.

Risk 2: Mishandling The Position Or Temporary Replacement

Many businesses bring in fixed-term cover, a contractor, or adjust team hours while an employee is on parental leave. When the employee resigns, you might want to:

• make the cover person permanent, or
• restructure the role, or
• reduce the overall hours in the business.

These can all be legitimate business decisions - but be careful about jumping straight to “we’re changing everything” without checking what employment obligations apply to other staff impacted by the change.

If you’re changing existing team members’ hours as part of the reshuffle, you should do it properly. This is a common risk area: Reducing Staff Hours.

Risk 3: Getting Final Pay Wrong

Final pay mistakes can cause disputes quickly because they’re tangible and time-sensitive.

Typical issues include:

• incorrect annual leave payout calculations
• unclear termination date (so the payroll cut-off is wrong)
• assuming “they were on leave, so nothing is owing” (not necessarily true)

If there’s any complexity (commission-based pay, irregular hours, recent changes to role/hours, etc.), it’s usually worth getting advice so you don’t end up paying twice (once in final pay, then again in a settlement).

Risk 4: Turning The Resignation Into A Termination

Sometimes employers respond poorly to a resignation and say something like, “Don’t bother, you’re finished immediately” - without checking notice provisions or pay obligations.

This can quickly become a dispute if it’s inconsistent with the employment agreement or if it’s handled in a way that appears unfair.

If you’re in a situation where you think the employment relationship should end on your terms (not theirs), it’s important to slow down and consider proper process. For broader guidance on handling exits, this can help: Terminate An Employee.

How To Plan For The Business Impact (Without Creating More Legal Issues)

Once a resignation during parental leave is confirmed, the next question is usually: “What do we do operationally now?”

This is where small businesses can make strong, practical decisions - as long as they separate:

• ending the employment relationship correctly (resignation/notice/final pay), and
• rebuilding the role or team structure (recruitment, hours, contracts, and documentation).

Decide Whether You’ll Rehire, Restructure, Or Keep The Cover Arrangement

You might decide to:

• recruit into the role permanently
• offer the role to the person covering (if appropriate)
• split duties across the team
• reduce the role’s hours if business needs have changed

There isn’t a one-size-fits-all answer - but if your “solution” affects other employees’ roles, pay, or hours, treat it as an employment change that needs to be handled properly (consultation, written variation, etc.).

If You’re Considering Redundancy Elsewhere, Be Careful

A resignation may highlight that the business has changed (new systems, new workflows, less headcount needed). That can be real - but redundancy is still a structured process, not a quick decision.

If you’re thinking about removing or materially changing another role because of the post-resignation restructure, make sure you understand your obligations and follow a fair process: Redundancy.

Update Your Documents So You’re Protected Next Time

Resignations during parental leave are also a useful “stress test” of whether your business has the right foundations in place.

For example, do you have:

• a clear notice clause in each employee’s agreement?
• a process for resignations (including return of property and access removal)?
• confidentiality and IP protections where needed?
• consistent leave and payroll processes?

If the answer is “sort of,” that’s totally normal - lots of small businesses set things up quickly and then evolve. But tightening up now can save you a lot of time (and cost) later.

Practical Templates: What To Put In Your Resignation Response Email

You don’t need to overcomplicate your reply. You just need it to be clear, polite, and consistent with the employment agreement.

Here’s a practical checklist of what your written response should cover:

• Confirmation of resignation: “We confirm we’ve received your resignation dated [date].”
• Notice period: “Your notice period is [X] weeks under your employment agreement.”
• Last day of employment: “Your employment will end on [date].”
• Parental leave status: “You will remain on parental leave until your end date (unless otherwise agreed).”
• Final pay: “We will process your final pay, including any outstanding entitlements, in the next pay cycle / by [date].”
• Return of property: “Please let us know a suitable time for returning company property.”
• Contact details: “Please confirm your current postal address and preferred email for final documents.”

If something is unusual (for example, they resign effective immediately, there’s disagreement about notice, or you’re considering ending employment earlier than the notice period), get legal advice early. Small issues become big issues when they’re handled informally.

Key Takeaways

• A resignation during parental leave is generally valid in New Zealand, but you should confirm it in writing and keep communications clear and respectful.
• Your starting point should always be the employee’s notice period and resignation requirements under their Employment Contract.
• Confirm the last day of employment (termination date) and ensure both sides understand whether anything will be worked during the notice period.
• Be careful with early termination and payments for notice - if you’re considering it, check the rules around Payment In Lieu Of Notice first.
• Final pay (especially annual leave payouts) is a common dispute area, so calculate carefully and keep a record of how you arrived at the numbers.
• When reshuffling your team after a resignation, manage changes to other staff properly - especially if you’re Reducing Staff Hours or considering Redundancy.
• If you suspect the resignation wasn’t voluntary or you’re unsure about process, get advice early - it’s often much easier (and cheaper) to prevent a dispute than to fix one later.

If you’d like help handling a resignation during parental leave properly - including reviewing your employment documents, notice obligations, and final pay risks - you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.