Notice Periods in Employment Contracts

Table of Contents

How much notice am I entitled to if I am terminated by my employer?

Reviewing the employment contract is an essential first step in understanding your employment relationship. Confirming the terms and conditions outlined in the employment contract will be the first step in calculating the compensation and financial loss you may be entitled to due to a breach of the employment contract or wrongful dismissal.

Termination clauses are essential terms of employment contracts and typically provide crucial information relevant to a potential termination of the agreement, such as a requirement that the notice of termination be provided in writing, in what circumstances termination will occur, and most importantly, the amount of notice the employee is entitled to be given (or alternatively payment in lieu of notice).

If an employment contract does not contain a termination clause or notice period, or in circumstances where the clause or notice period included in a contract is deemed inadequate, legislation and case law can assist in providing for an implied reasonable notice period.

What minimum notice period am I entitled to if my employment was terminated without reasonable, or any, notice?

Minimum notice periods are outlined under the National Employment Standards (NES) and in the Fair Work Act to override any inconsistency contained in an employment contract. The reasonable notice period an employee is entitled to under the NES will vary according to the period of continuous service the employee has provided to the employer, as outlined below:

Period of continuous service

Notice Period

Not more than 1 year

1 week

More than 1 year but not more than 3 years

2 weeks

More than 3 years but not more than 5 years

3 weeks

More than 5 years

4 weeks

Note: This period is increased by 1 week if the employee is over 45 years old and has completed a period of at least 2 years of continuous service when the notice is given.

Example of the minimum notice period required
Jane is 55 years old. She has worked for her employer for 4 years. Jane’s notice period under her employment contract is limited to 2 weeks. If Jane was terminated by her employer, the NES would raise her notice period to 4 weeks, which includes 3 weeks based on her period of continuous service and an additional 1 week as she is over the age of 45. This means that Jane’s employer would have to provide her with 4 weeks’ notice of her termination, despite what is stated in Jane’s employment contract.

What if there is no notice period provided in the employment contract?

If there is no notice period included in the employment contract, the courts can imply a period of reasonable notice to any employment contract. In other words, the courts will generally assume that a term governing an employee’s entitlement to a minimum notice period automatically applies to any contract, even where the parties have not expressly agreed to such a term.

This was a major finding from the High Court case of Byrne v Australian Airlines,1 where it was held that:

“In the absence of anything to the contrary and putting to one side the provision in the award for notice, at common law a contract of employment for no set term is to be regarded as containing an implied term that the employer give reasonable notice of termination except in circumstances justifying summary dismissal.”2

This means that the court will imply a reasonable notice term into any employment contract, provided there have been no expressions to the contrary on the formation of the contract. Where such a finding is justified, the next question to consider is the length of the implied notice period.

The Court makes a determination on reasonable notice periods by considering a number of factors, including but not limited to:

  • Length of period of employment;
  • Seniority of the position;
  • Age;
  • Qualifications/Experience;
  • Entitlements for a period of long service (e.g. pension); and
  • Level of difficulty involved in finding comparable employment.

Using this method, the courts may conclude that the reasonable notice period could be longer than the minimum notice periods allowed further under the NES. The case of Taske v Occupational & Medical Innovations Limited is an example where the court considered the factors above and concluded that the reasonable notice period was, in fact, nine months.3

However, recent decisions have cast doubt over whether reasonable notice periods will be awarded in excess of a relevant employment award (e.g., Hospitality Industry (General) Award [MA000009], Legal Services Award [MA000116], etc) and the Fair Work Act itself. In Brennan v Kangaroo Island Council,4 the Full Court of the South Australian Supreme Court chose to disregard arguments of an implied longer term of reasonable notice, and instead implied a notice period in accordance with the relevant employment award in the circumstances. Conversely, the court in Kuczmarski v Ascot Administration Pty Ltd5 held that there was nothing to justify an implied term of reasonable notice above what was otherwise allowed for under the Fair Work Act.

To date, this remains a contentious issue as the ruling in Kuczmarski6 was subsequently rejected by the Federal Circuit Court in McGowan v Direct Mail and Marketing Pty Ltd,7 where the court chose to revert to the position that reasonable notice is calculated according to the various factors that may apply to each individual case as outlined above.

What if I have a notice period in my contract, but my employer has disregarded it?

Notwithstanding the arguable reasonableness of a notice period contained in an employment contract, an employee may still have a claim for breach of the employment contract where the employer has not complied with the prescribed notice period noted in the respective employment contract.

Compensation

The ability of an employee to obtain compensation for breach of their employment contract by the employer due to termination without reasonable notice will depend on the circumstances of each individual case. If the employment contract was terminated and the notice period in the employment contract is below the minimum standard outlined in the Fair Work Act, the employee will be compensated up to and including the amount stipulated in the NES. If there is no notice period provided in the employment contract, the court can impose a reasonable notice period based on an assessment of various factors as they pertain to each individual case, including the factors outlined above, in order to allow for accurate compensation to the employee. If you are an employee and your employer has disregarded the notice period in your employment contract (if any), you may have a claim under unfair dismissal or adverse action.

Contact Gibbs Wright Litigation Lawyers

Contact Gibbs Wright, if you have a query in relation to your employment dispute for a free and confidential discussion about your matter. Our employment lawyers can assist you in a variety of employment matters, including commencing or defending proceedings.

[1] Byrne v Australian Airlines (1995) 185 CLR 410.

[2] Ibid 450.

[3] Taske v Occupational & Medical Innovations Limited [2007] QSC 147.

[4] [2013] SADC 99.

[5] Kuczmarski v Ascot Administration Pty Ltd [2016] SADC 65.

[6] Kuczmarski v Ascot Administration Pty Ltd [2016] SADC 65.

[7] McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227.

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.

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