Employee Stops Working During Notice in NZ: What to Do

It’s a situation that can catch any small business owner off guard: your employee resigns, you plan for a tidy handover, and then they suddenly stop showing up (or stop doing the work) during their notice period.

When an employee stops working during their notice period, it can create immediate problems - rostering gaps, unhappy customers, missed deadlines, and real stress for your team. At the same time, you can’t just react on instinct. In New Zealand, you still need to manage the situation fairly and follow a proper process, even if the employee is being difficult.

Below, we’ll step through your practical and legal options, what you should (and shouldn’t) do, and how to protect your business from day one.

Why Notice Periods Matter (And What “Stopping Work” Can Mean)

A notice period is there to give both sides time to transition. For you, it’s usually about:

recruiting or planning cover;
getting a proper handover;
protecting relationships with customers, suppliers, and the rest of your team; and
wrapping up access, property returns, and confidentiality obligations.

But “stopping work” can look different in real life. Common scenarios include:

No-show / absenteeism: the employee simply stops coming to work without approval.
Refusing duties: they turn up but refuse to do certain tasks, or do the bare minimum.
Walking off mid-shift: leaving early or abandoning a shift.
Calling in sick repeatedly: sometimes genuine, sometimes questionable, but either way you need to manage it carefully.
Turning up but disruptive: behaviour issues, conflicts, or actions that harm the workplace.

In NZ, the “right” response depends heavily on what’s happening, what your employment agreement says, and whether there is a genuine health issue involved (including stress or mental health).

First Things To Check Before You Take Action

Before you jump to disciplinary action or decide to stop paying them, take a beat and work through these checks. This is the kind of groundwork that can save you a lot of pain later if the matter escalates.

1) Check The Employment Agreement (Notice, Duties, Pay, And Policies)

Your starting point is always the written terms. A well-drafted Employment Contract should cover things like:

the required notice period (and whether it differs during probation/trial periods);
hours of work and location;
what happens if notice isn’t worked;
whether your business can place someone on garden leave (if applicable); and
conduct and disciplinary expectations (often supported by workplace policies).

If the agreement is vague or silent, you may still have options - but you’ll want to tread carefully and focus on fair process.

2) Confirm Whether They’re Actually On Approved Leave

Sometimes this issue is caused by miscommunication rather than misconduct. Double-check whether:

they’ve requested leave and a manager approved it (in writing is best);
they’ve provided a medical certificate and are on sick leave;
they’ve raised a health and safety concern or a family emergency; or
there’s been a roster change they didn’t receive.

Even if you strongly suspect they’re just “done”, treat it as a fact-finding exercise first.

3) Consider Health And Safety (Especially If There’s Conflict Or Stress)

If the employee is distressed, behaving erratically, or conflict is escalating, remember you still have duties under the Health and Safety at Work Act 2015 to take reasonably practicable steps to provide a safe workplace.

That doesn’t mean you have to tolerate unsafe behaviour. It means you should respond in a controlled way - for example, separating people, pausing certain duties, or sending someone home on pay while you work out next steps (with advice if needed).

Practical Steps To Take When The Employee Stops Working During Their Notice Period

When an employee stops working during their notice period, the best approach is usually: document, communicate, give a chance to respond, then decide what’s reasonable.

Step 1: Contact Them Quickly (And Keep It Neutral)

If they don’t show up, contact them as soon as you reasonably can. Keep your message neutral and factual. For example:

“You were rostered to start at 9am today and haven’t arrived. Can you please confirm your situation and when you’ll be returning?”

Avoid emotional language, threats, or assumptions. If this later turns into an employment dispute, those early messages often get reviewed closely.

Step 2: Record What’s Happening

Start a clear record straight away. Keep:

rosters and timesheets;
screenshots of messages or emails;
notes of phone calls (date/time, who said what);
customer impacts or operational issues (briefly, without exaggeration); and
any relevant past warnings or performance notes (if they exist).

This is not about building a “case” for the sake of it - it’s about having an accurate timeline so you can make fair decisions.

Step 3: Ask Whether There’s A Reason (Illness, Injury, Emergency)

If they indicate they are unwell, you can usually request a medical certificate in line with your policies and the Holidays Act rules (for example, if sick leave is taken for 3+ consecutive calendar days, or earlier if your agreement allows and you cover the cost).

If there’s a mental health component, the key is to manage it respectfully and consistently, while still running your business.

Step 4: Hold A Short Meeting If They’re Willing

If they’re still engaged enough to communicate, arrange a short meeting (in person or by video/phone). Your goal is to confirm:

Are they resigning effective immediately (instead of working notice)?
Are they saying they can’t work due to sickness or another valid reason?
Are they refusing to perform certain tasks?
Are there allegations or concerns you need to investigate?

Even in a “notice period” situation, it’s worth remembering NZ employment law expects good faith behaviour from both parties. Clear communication can sometimes avoid escalation.

Your Legal Options If The Employee Refuses To Work Their Notice

If you’ve confirmed the employee is not working their notice period without a valid reason, your next steps depend on the seriousness of the behaviour and the risk to your business.

Option 1: Agree To End Employment Early (Mutual Agreement)

In many small businesses, the quickest resolution is a written agreement that:

employment ends on a specific date (earlier than the original notice end date);
what happens with final pay and any leave owing;
return of company property and access (keys, devices, logins); and
confidentiality and restraint obligations (if relevant).

This can be a clean outcome if you’ve already lost trust and the handover isn’t realistically going to happen anyway.

Option 2: Payment In Lieu Of Notice (If It’s Allowed)

If your agreement allows, you may be able to end employment immediately and pay out the notice period rather than requiring the employee to work it. This is often used where it’s not practical (or safe) for them to remain at work.

The details matter here - the right to do this often needs to be clearly set out, and you need to calculate the payment correctly. It’s also important to handle final pay properly and avoid accidental underpayments. In many cases, it’s worth getting advice on Payment in Lieu of Notice before you take this step.

Option 3: Garden Leave (Sometimes Appropriate, But Not Automatic)

Garden leave is where the employee remains employed (and continues to be paid) but you direct them not to attend work during the notice period. This can help you:

protect customer relationships and confidential information;
reduce disruption in the workplace; and
avoid “half-working” performance issues during notice.

Whether you can lawfully place an employee on garden leave depends on the employment agreement terms and the circumstances. If you want this option available, it’s best to build it into your contracts and policies from day one.

Option 4: Manage It As Misconduct (With A Fair Process)

If the employee is refusing to work, failing to attend, or behaving in a way that breaches their obligations, this can potentially be treated as misconduct or serious misconduct.

However, even if the employee is on the way out, you still need to follow a fair disciplinary process. That generally means:

raising your concerns clearly (in writing is best);
providing relevant information (what you say happened and when);
giving the employee a reasonable chance to respond;
considering their explanation with an open mind; and
only then deciding on an outcome (warning, termination, etc.).

This is where many employers get caught out - acting too quickly, or “punishing” an employee without proper steps, can lead to personal grievance risk.

If you’re considering termination due to what’s happening in the notice period, it’s worth checking your approach against a proper process like Performance Management Process guidelines, and also understanding your options around How to terminate an employee in a compliant way.

Option 5: Treat It As Abandonment Of Employment (Only In Clear Cases)

Some employment agreements (and workplace policies) define “abandonment” - for example, if an employee is absent without contact for a certain number of days.

Even if you believe the employee has abandoned employment, you should still take reasonable steps to contact them, invite an explanation, and warn them (in writing where possible) that you may treat it as abandonment if you don’t hear back.

This is a higher-risk area if handled casually. If the employee later argues they were sick, hospitalised, or otherwise unable to communicate, you may be exposed if you didn’t follow a fair process.

Option 6: Stand-Down (Limited Use And Needs Care)

Some employers ask if they can “stand down” an employee during notice because they’re causing issues or refusing work. In NZ, a stand-down generally isn’t something you can use freely - whether it’s available (and whether it can be unpaid) depends on your contractual rights and the specific circumstances.

If you’re exploring this option, get advice first so you don’t accidentally breach wage obligations or the employment agreement. It can help to understand what Employee Stand Down usually means in practice, and when it may (or may not) be available.

What Can You Do About Pay, Final Pay, And Deductions?

Pay is often where this situation becomes most sensitive. When an employee stops working during their notice period, employers sometimes want to withhold wages, “deduct the notice”, or offset losses. In NZ, you need to be very careful here.

Do You Have To Pay Them If They Don’t Work?

Generally:

If the employee doesn’t work the hours and they are not on approved leave, they will usually only be entitled to be paid for time actually worked. However, the practical outcome can differ depending on whether they’re waged vs salaried, how pay is structured, and what the employment agreement says.
If you direct them not to attend work (for example, you tell them to stay home), they may still need to be paid, depending on the reason, the agreement terms, and whether they remain ready, willing and able to work.

In other words, “no work, no pay” may apply in some situations, but it’s not a one-size-fits-all rule - and you should ensure you’re not breaching the agreement, minimum entitlements, or wage protection rules.

Can You Deduct Money Because They Didn’t Work Their Notice?

In many cases, you can’t simply deduct money from wages unless:

there’s a lawful basis in the employment agreement; and
the employee has provided written consent to the deduction (and it complies with relevant rules, including under the Wages Protection Act 1983).

If you’re thinking, “They owe us because they’ve left us in the lurch,” that feeling is understandable - but the legal approach is not always straightforward, and getting it wrong can create bigger problems than the original notice issue.

What Happens With Annual Leave And Other Entitlements?

Even if the employee has behaved badly during notice, they may still be owed final entitlements when employment ends. Final pay often includes things like:

any wages for hours actually worked;
payment for any annual leave owing (or holiday pay depending on eligibility and timing);
any alternative holidays owing;
any commission/bonuses if contractually due (this depends on the agreement wording); and
reimbursement of approved expenses.

This is also why it’s so important to have clear contract wording about notice, final pay timing, deductions, return of property, and incentives.

If They Want To Resign Immediately (No Notice), Is That Allowed?

Sometimes the employee will effectively change their resignation to “immediate” by just not turning up. Your contract may require notice, but enforcing it in a practical way can be difficult, especially for smaller businesses.

It’s still worth understanding the general position on resigning without notice, because it will inform how you communicate with the employee and what outcome you aim for (for example, agreeing an earlier end date versus escalating to disciplinary action).

How To Prevent This Problem In The Future (Without Overcomplicating Things)

You can’t control every resignation, but you can absolutely reduce the risk and the impact.

Have Clear Notice And “During Notice” Clauses

Your employment agreement should clearly cover:

how much notice is required and how it must be given;
your ability to direct duties during notice (handover tasks, training someone else, documenting processes);
what happens if the employee doesn’t attend work; and
whether you can use payment in lieu or garden leave.

For many small businesses, this is one of those “set it up once, use it many times” legal foundations that pays off over the long term.

Use Simple, Consistent Offboarding Processes

A consistent offboarding checklist helps you act quickly and fairly when things go sideways. For example:

confirm resignation and final working day in writing;
handover plan (customers/projects);
return of property checklist;
removal of system access; and
final pay calculation workflow.

If you’re ever challenged, being able to show you followed the same process you’d follow for anyone is a big advantage.

Don’t “Wing It” On Discipline Or Termination

When emotions are high, it’s easy to make a fast call that feels justified in the moment (for example, firing someone by text because they didn’t show up).

In NZ, that can be an expensive mistake. If you’re considering ending employment early due to misconduct during notice, it’s worth getting advice first so you follow a fair process and reduce personal grievance risk.

Key Takeaways

If an employee stops working during their notice period, start by checking the employment agreement, confirming whether leave is approved, and gathering the facts before taking action.
Act quickly but neutrally - contact the employee, document what’s happening, and give them a fair chance to explain (especially where illness or stress may be involved).
Your options may include agreeing an earlier end date, using payment in lieu (if permitted), garden leave in appropriate cases, or managing the behaviour as misconduct with a proper process.
Be very careful with pay and deductions - in some cases you may not have to pay for unworked time, but rushed decisions or unlawful deductions can create bigger legal issues.
Having clear notice period clauses, offboarding steps, and well-drafted employment documents can prevent a lot of disruption and protect your business from day one.

If you’d like help handling a notice period issue, updating your employment agreements, or managing a resignation the right way, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.

What To Do When An Employee Stops Working During Their Notice Period In NZ