Summary

The recent decision of the South Australian District Court in Kuczmarski v Ascot Administration P/L1 has cast significant doubt on whether the concept of "reasonable notice" is still relevant to employees who are entitled to a minimum notice period under the Fair Work Act 2009 (Cth) (Act).

The vast majority of Australian employees are covered by the Act or equivalent State based legislation.

Until legislation is amended to either remove minimum notice requirements or state that these requirements do not interfere with the common law right to reasonable notice, the decision could lead to the concept of "reasonable notice" becoming largely irrelevant.

This eBulletin outlines the implications and considerations for employers during this period of uncertainty.

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Reasonable notice: An Endangered Species?

In our Workplace Relations & Safety Bulletin Summer 2015, we considered the history of reasonable notice and its uncertain future.

Now, a decision of the South Australia District Court has raised the possibility that an implied right to reasonable notice of termination could soon become a thing of the past.

The case: Kuczmarski v Ascot Administration P/L

Mr Kuczmarsk was employed in various roles at Ascot Administration since he joined the company in 2002. At the time of his dismissal in 2015, Mr Kuczmarski was the National Group Human Resources Manager and his contract did not specify a notice period for termination. Mr Kuczmarski was told that he would be made redundant and was paid five weeks' salary in lieu of notice, in accordance with the minimum requirements of section 117 of the Fair Work Act 2009 (Cth) (Act).

Mr Kuczmarski brought a claim against Ascot Administration arguing that section 117 only provided for a "minimum" rather than "reasonable" notice period, and a term of "reasonable notice" was implied in his contract.

Ascot Administration defended the claim, arguing that because section 117 of the Act provided a period of notice of termination, and Mr Kuczmarski was covered by the Act, it was not necessary to imply a term of reasonable notice into the contract.

The judge accepted Ascot Administration's argument, concluding that:

"Where termination of notice is dealt with in a contract, award or act it is not ‘necessary’ to imply the term because the topic has been addressed."

The judge recognised that there was a significant distinction in this case between the required minimum period of notice and what was reasonable notice. The judge also found that, had Mr Kuczmarski not been covered by section 117 of the Act, he would have been entitled to six months' "reasonable notice".

Implications for Employers

The vast majority of Australian employees are covered by section 117 of the Act or equivalent State based legislation.

As such, the decision is very significant in that it could lead to the concept of "reasonable notice" becoming largely irrelevant, at least until such time as there is an amendment to the legislation to either remove minimum notice requirements or state that these are not intended to interfere with the common law right to reasonable notice.

However, significant uncertainty will remain until the matter is addressed by a superior court, and it is likely that the High Court will have to deal with the issue before all doubt is removed.

In the meantime, employers should avoid becoming part of the case law by ensuring that their contracts of employment clearly make arrangements for notice of termination. It is particularly important to be mindful of this when employees move sideways or vertically within an organisation, as often contracts are not updated appropriately, which can lead to "reasonable notice" disputes.