The Supreme Court of NSW has awarded a former farm manager around $300,000 in compensation, including three months’ pay, as reasonable notice for his termination.

The manager’s contract did not contain an express provision for notice of termination, but he successfully argued that he was entitled to reasonable notice of three months based on his age (he was 53 at the time of the dismissal) and given he exercised a high level of responsibility in the role.

The bulk of the manager’s claim related to financial reimbursement for the use of his two tractors, which led the court to determine whether there was an implied term in the oral agreement that the manager would be paid for tractor hire on termination of his employment. In its defense, the employer unsuccessfully argued that the verbal agreement was too uncertain to give rise to an enforceable contract. Rather, the Court upheld the manager’s claim for reimbursement by finding that the implied term was “reasonable and equitable” in the circumstances.

Ware v Amaral Pastoral Pty Ltd (No 5) [2012] NSWSC 1550

Lessons for Employers: While the facts in this case are unique, this decision highlights the risks employers expose themselves to when employment contracts are not in writing or are out of date. Reasonable notice of termination can be implied by the courts where the contract does not provide an express notice period. Claims for reasonable notice are generally in excess of the minimum statutory notice periods under the National Employment Standards (which is up to five weeks’ pay). In the case of long-serving senior employees and executives nearing the end of their working life, reasonable notice claims can be in the range of nine to 12 months’ (and even as high as 18 months’) notice of termination.