The implied term of reasonable notice was always a claim employees could bring when their employment contracts were silent on notice and an award or an enterprise agreement providing for notice on termination did not apply to their employment. The authorities, until most recently, supported the position that where an employment contract lacked an express provision for notice, employers were liable to provide between 3 and 12 months’ reasonable notice.
Recent cases have created uncertainty around the law of reasonable notice, considering the interaction between section 117 of the Fair Work Act 2009 (Cth) (FW Act) (which requires an employer to provide a minimum period of notice on termination (except for cases of serious misconduct)) and the common law right to reasonable notice of termination as an implied term.
In Kuczmarski v Ascot Administration P/L 1, Mr Kuczmarski, an employee of 13 years without a written employment contract, was claiming reasonable notice of 12 to 18 months. His employer argued that because of the operation of section 117 of the FW Act, it was not necessary to imply a term of reasonable notice. The District Court of South Australia agreed with the employer’s submission holding that there was no necessity for a term requiring reasonable notice to be implied because a provision establishing the employee’s entitlement to notice was contained in section 117. That is, because of section 117, there was ‘no gap to fill’.
A few months since the Kuczmarski decision, a different conclusion was reached in the Federal Circuit Court decision of McGowan v Direct Mail and Marketing Pty Ltd 2. While the employer was successful in defending a claim for reasonable notice on the basis that there was a valid written contract providing for notice of termination, the Court rejected the argument that section 117 prevented the implication of the term of reasonable notice observing that section 117 provides a minimum period of notice only and does not displace a right to reasonable notice when the contract of employment is silent on the question of notice.
Lessons for employers:
To avoid becoming part of the uncertainty in this area of the law, employers should ensure:
- All employees are employed pursuant to written contracts of employment that expressly provide for notice of termination.
- All promotions or other changes in an employee’s duties and responsibilities, including remuneration changes are updated or at least contemplated in their written contract of employment.