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Welcome to the January edition of our Corporate and Commercial Briefly.

>   Walking the Talk - Industrial Relations in the Real World
>   Employment – 'Reasonable notice' of termination - what is it, and when is it needed?

Walking the Talk - Industrial Relations in the Real World

Walking the Talk
Industrial Relations in the Real World
4th April 2014
Crowne Plaza Adelaide

Following our highly successful conferences in both 2012 and 2013, the Norman Waterhouse Employment and Industrial Relations Team Invites you to join them again for a full day of in-depth and interactive analysis of contemporary workplace issues. This is an invaluable learning experience for Chief Executive Officers, human resource professionals and senior managers across the State and Federal industrial regimes.

Program online now!


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Employment – 'Reasonable notice' of termination - what is it, and when is it needed?

The Full Court of the Supreme Court of South Australia has recently handed down a decision regarding the principle of ‘reasonable notice’ in relation to the termination of employment (Brennan v Kangaroo Island Council [2013] SASFC 151). This ruling from the State’s most superior Court presents a good opportunity to examine the concept of ‘reasonable notice’, which is relevant to employment relationships both in the State and Federal industrial relations jurisdictions. Norman Waterhouse acted for the Council in this matter.

Notice generally

It is a matter of law that an employee is entitled to be provided with notice of the termination of their employment by their employer, save for certain circumstances warranting summary dismissal.

Terms which provide notice periods are often found in Awards, Enterprise Agreements or the contracts of employment of individual employees. A contract may expressly provide for a period of notice. In such a case, the contractual term takes precedence (provided it is equal or greater to any minimum period prescribed by legislation or relevant Awards). However, disputes will often arise where a contract is silent as to the amount of notice to be given in the event of termination.

‘Reasonable notice’

Where a contract is silent on any matter, the law may automatically imply a term into the contract to ‘fill the gap’. This will occur where the filling of the gap is necessary for the practical operation of the contract.

If there is such a contractual ‘gap’ regarding notice of termination, this gap will need to filled. Accordingly, courts will, where appropriate (and generally after the fact of termination), imply into an employment contract a term that the employee must be provided with ‘reasonable notice’ of termination. Furthermore, if a contract does in fact contain a notice of termination clause but the nature of employment has changed significantly since that time, the court will imply a new term of ‘reasonable notice’.

The purpose of a notice period is to allow an employee time to obtain new employment if they choose to do so. Accordingly, when calculating what ‘reasonable notice’ is in any given circumstance, Courts will have regard to various factors, including (amongst other things):

  • the age, qualifications and experience of the employee;
  • the nature of the employment;
  • the organisational seniority of the employee;
  • any noteworthy concessions or commitments made by the employee for the sake of their employment;
  • length of service; and
  • the prospects of re-employment in a similar position.

Just what is a ‘reasonable’ period is calculated as at the time of termination, not at the time of entering into the contract.

Reasonable notice vs Legislation and Awards

A source of regular dispute is whether the presence of prescribed minimum periods of notice in legislation or Awards mean that there is no ‘gap’ to be filled regarding notice in a contract which lacks such a term.

The abovementioned Brennan decision gives a strong indication that, in the State jurisdiction at least, the presence of a prescribed notice period in a relevant Award (and virtually all State system employees are covered by an Award with such a provision) precludes the implication of a term of reasonable notice into an employment contract. However, that decision is presently under appeal to the High Court of Australia, and so this answer is not definitive.

There is also some contention in the Federal jurisdiction regarding this issue, particularly whether the minimum periods set out in Section 117 the Fair Work Act 2009 (Cth) ‘fill’ any gap in relation to notice.

Tips for employers

It is advisable that employers cover the issue of notice of termination in their employment contracts. Employers should consider incorporating an express term in their employment contracts dealing with notice of termination, where such term provides for a period or periods equal or greater than the minimums required under legislation or any relevant Awards. An express term clearly evidences that both parties have agreed to the given notice period, and will preclude any term of reasonable notice being implied.

Alternatively, employers could include a term that expressly incorporates into the contract any legislative or Award provisions regarding notice of termination. Even a simple statement that a contract is ‘governed by legislation and Awards’ has been found to incorporate into a contract the relevant statutory minimum period of notice. Another similar approach would be to include a clause to the effect that the parties intend that no more than the minimum required period of notice will be provided.

The concept and application of implied terms of ‘reasonable notice’ are sources of frequent disputes, both in the State and Federal jurisdictions. By ensuring that there is no ‘gap’ regarding notice of termination in any employment contract, employers can effectively prevent any involvement in a dispute regarding what constitutes ‘reasonable notice’ in respect of any employee.

For more specific information on any of the material contained in this article please contact Sathish Dasan on 08 8210 1253 or sdasan@normans.com.au.



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