There is no legal requirement for an observation period.
There is a grace period of 10 minutes that applies at the end of a period of paid or free parking. So if you had paid for one hour, a CEO cannot serve a PCN until 10 minutes have elapsed from the end of the parking period.
However, time is always allowed to pay for parking, so if you were in the process of paying to park, but the CEO served a PCN, you would be on much stronger ground.
