Reasonable notice – could your employees make such a claim on termination?
What is reasonable notice?
In circumstances where the terms of an employment contract don’t specify a notice period on termination, or where an employee has an employment contract that is out of date (for instance, it relates to a previous position held by the relevant employee), an employee may be able to claim that is an implied term in their employment that they are due “reasonable notice” (usually anywhere from one to 12 months’ pay) on termination.
In deciding what “reasonable notice” would be in a given case, the courts take into consideration a range of factors related to the particular employee’s circumstances, including:
- level of seniority;
- size of salary;
- length of service;
- professional standing and age; and,
- degree of job mobility.
Some recent decisions have raised a question about whether the principle of reasonable notice is applicable in circumstances where Modern Awards and or the Fair Work Act provide for a minimum period of notice. For example:
Brennan v Kangaroo Island Council  SASR
In this case, the South Australian Supreme Court held that reasonable notice may not be implied in circumstances where an employee is covered by a Modern Award which prescribes a period of notice on termination.
Kuczmarski v Ascot Administration Pty Ltd  SADC
In this case, the South Australian District Court held reasonable notice may not be implied in circumstances where an employee has the benefit of the notice periods set out in the Fair Work Act /National Employment Standards (NES).
However, the most recent decision and the current leading authority, is McGowan v Direct Mail and Marketing Pty limited  FCCA, which held:
- the notice provisions in the Fair Work Act are intended to provide a minimum period of notice only;
- by paying the minimum period of notice under the Fair Work Act, employers will have satisfied the NES and not be liable for a breach of those standards, but that does not exclude the possibility of an employee making a reasonable notice claim; and,
- employers can only be obliged to provide reasonable notice beyond the requirements of the NES in circumstances where a person’s contract of employment is silent or makes no reference to notice.
What does this mean for you?
You can’t simply rely on the notice provisions in any applicable Modern Award or those specified in the Fair Work Act to avoid the possibility of a reasonable notice claim. Rather, you need to specify in writing in the employment contract, the amount of notice applicable to each employee on termination, even if that merely repeats the NES standard.
What can you do to avoid a reasonable notice claim?
- check your employment contracts to make sure they specify a notice period on termination;
- check that all employees have employment contracts; and,
- check that all employees have employment contracts that match the position they are currently performing (that is, they aren’t out of date).
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