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You want to let one of your employees go. As a model employer, you’ve already checked that you have the right to terminate your employee, and want to ensure you do it correctly. Importantly, you should consider how much time you must provide your employee between telling him or her that you intend to terminate their employment and their last day at your company (what we refer to as the “notice period”).

Employers can find the amount of notice that applies in the employment agreement, legislation or an industrial award. We set out below notice periods in employment agreements.

What Does the Employment Contract Say?

Does the employment agreement contain express terms that tell you how much notice you must provide? If so, you must follow whatever period is explicitly set out in the contract. One exception is whether the employee would receive a longer notice period under the Fair Work Act 2009 (Cth) (“Fair Work Act”), or an industrial award, or if the notice period is plainly unfair. 

When bringing on new employees, make sure that you have a written employment agreement clearly setting out each party’s rights and responsibilities. Ideally, the Agreement should be consistent with what an employee would be entitled to under legislation or an Award. This reduces the risk of disagreement over the minimum notice period should the day come when you have to fire the employee.

Of course, it’s not always so straightforward. If every employment relationship had a written contract with a specific clause dealing with the notice period for termination (an employment lawyer’s dream world), this would be a very short article – which leads us to the next question.

What Do I Do if the Employment Contract Doesn’t Say Anything About the Required Notice?

Judges have traditionally developed a body of case law that has implied a term into employment agreements requiring “reasonable” notice. In Westpac Banking Corporation v Wittenberg [2016] FCAFC 33, the Full Court of the Federal Court held that an implied term cannot coexist with an express clause setting out how much warning is required. 

Courts and tribunals will try to work out what notice would be “reasonable” in the circumstances. In doing so, judges have had to grapple with how the Fair Work Act interacts with the implied term of reasonable notice. Section 117 sets out a minimum notice period for employees (set out in the table below):

 

Length of Time Employee Has Continuously Worked For Employer Minimum Notice Period
< 1 Year 1 Week
1 year < 3 years 2 Weeks
3 years < 5 years 3 Weeks
> 5 years 4 Weeks

 

If the employee has continuously worked for you for at least two years, and they are over the age of 45, an additional week will apply to the minimum notice period listed above. The length of time is up to the end of the day when you issue the termination notice.

Will I Be Required to Give the Minimum Notice Under the Fair Work Act, or a Reasonable Notice Period?

Here is where the situation can get complicated. A grey area of the law is whether the Fair Work Act overrules the common law approach of implying a “reasonable” notice period or whether the legislation must be read alongside the case law so that one informs the operation of the other. 

It’s easy to accuse lawyers of fence-sitting, but there is no clear-cut or obvious approach to interpreting the relevant document. Where the employment agreement doesn’t offer an easy answer, we will consider how courts have interpreted the law in similar situations, and the general principles they have applied.

In March 2016, the South Australian District Court in Kuczmarski v Ascot Administration Pty Ltd [2016] SADC 65 commented on the interaction between the minimum period under the Fair Work Act and the reasonable period under the common law. The Court found that if section 117 applied to an employee, the employer would only need to observe the minimum notice set out in that section. An implied term requiring “reasonable” notice would not apply on top of that minimum period.

The Federal Circuit Court took a different approach five months later in McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227 noting that section 117 did not override the requirement for “reasonable” notice. Even if an employer complied with section 117 of the Fair Work Act, the employee would still have the right to “reasonable” notice. What would be “reasonable” would depend on that employee – taking into account, for example, their seniority and amount of time working for the employer.

***

The Fair Work Act, industrial awards or common law may be able to ‘fill in the gaps’ where your employment agreement is silent on how much notice you must provide an employee. If you have any questions or need advice on the recommended approach to calculating the applicable notice period, get in touch with our employment law team on 1300 544 755.

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