Reasonable notice – could your employees make such a claim on termination?

Anna Ford

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contract don’t specify a notice period on termination, or where an employee has an employment contract that is out of date (for instance, it relates to a previous position held by the relevant employee), an employee may be able to claim that is an implied term in their employment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:

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 [2013] 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 [2016] 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 [2016] FCCA, which held:

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?

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