#13071 - Termination And Remedies - Employment Law

Topic 6: Termination and Remedies

• Duration and Expiry of Employment Contracts

  • At common law, either party to an employment contract may bring the contract lawfully to an end by giving notice to the other party. The contract itself should state what the parties’ obligations are with respect to giving notice of termination.

  • A contract an end in any of the following ways

    • By prearrangement e.g. when a set date is reached, or a task is finished, or a particular event occurs

    • By one party exercising a unilateral right of termination

    • By mutual agreement between the parties

    • By the employee abandoning their employment; or

    • By operation of some legal rule

  • Difference notice requirements for different types of contracts

    • Fixed term:

      • Generally, no notice requirements in fixed term contracts

      • If an employer allows an employee to work on past that date without putting a new fixed-term contract in place, they will be taken to have agreed to the employment becoming indefinite. The employer may then have to give ‘reasonable notice’ in order to terminate the new contract.

      • If it is a length contract, may be sensible to stipulate that it can be terminated by notice, but if this is not included it will not be implied.

      • If the contract has retirement date, it can be a fixed term contract

    • Continuing contracts need notice requirements

    • Casual employment (review)

      • Notice will not apply to casual employment

  • Abandonment/frustration

    • If you walk away, abandoned it, only entitled to work you have done and any unclaimed leave

    • Frustrated: e.g. if they go to prison. Or equipment failure. Nowadays expressly provided for by stand down provisions

  • Probationary periods

    • In some cases a probationary period can be viewed as a fixed-term contract, in other instances it can be construed to mean that the employee has a continuing engagement from the outset, and the employer may be able to terminate at the end of the probationary period only if certain procedures are followed

• Notice of Termination

  • What is ‘giving notice’ of termination?

    • Either party telling the other that they are bringing the contract to an end at a particular date in the future.

  • What notice needs to be given?

    • Parties are bound by express term in contract (unless less than FWA standard – see s 117)

    • At common law, if there is no express term, then reasonable notice must be given. However this will only apply if the FWA does not apply.

    • If they fall under FWA and have no express term, FWA will apply

      • If the express term is longer than FWA period, the employee has a CL right to enforce that longer notice period

    • If they fall under FWA and don’t have an express term, does reasonable notice still apply?

      • If the act provides for notice periods, and your contract is silent: a term as to reasonable notice is implied when there’s a gap in the contract. If the statute fills the gap, why do you need an implied term?

      • Some decisions say statutory provisions mean it’s redundant. Others argue that statute provides for minimum terms, still open for employee to argue that it should be reasonable (tendency towards this argument)

  • What is ‘reasonable notice’

    • Question of Fact, things to consider Quinn v Jack Chia; Dyer v Peverill

      • Remember: the content of “reasonably notice” is to be determined as at the date when notice is given, not when the contract is entered into.

      • Is there a custom and practice?

      • How important is their position? Higher the salary, longer the period of notice

        • Senior managers can generally expect at least six months, even when they have only been in their job for a short time Lau v Bob Jane T Marts 2004

        • This can often rise to 12 months for longer services Quinn v Jack Chia

        • In Rogan-Gardiner v Woolworths four months was sufficient for an executive whose role was ‘middle management’

        • In Wintle v RUC Cementation 2013 a low-paid tradesman in employment for less than two months should received no longer than a week.

      • How old are they? How long have they served? Older they are more difficult to get work

      • Did they give up a job to take this one?

      • Whether they were “head-hunted” for the position Quinn

      • How long may it take them to find another job?

      • What are their super rights? If you’re older, reasonable notice may be longer to accommodate super payments

  • Withdrawal of notice

    • Not permitted without the employer’s consent Gunnedah Shire Council 1995

  • Payment in lieu of notice

    • Explicitly recognised by s 117(2)(b) of the FWA which speaks of the employee receiving ‘payment in lieu of notice’

      • This payment is calculated by reference to the full rate of pay for the hours the employee would have worked had the employment continued until the end of the notice period.

      • Full rate of pay is defined in s 18 to include incentive payments and bonuses, loadings, allowances and penalty rate

    • However, what is less clear is whether the employer can make this choice when exercising a power to give notice in excess of the statutory minimum, under a contract that does not expressly allow for payment in lieu

      • In Sanders v Snell 1998 the High Court held that an employer was in breach of contract by purporting to terminate without allowing the employee to serve out a notice period. The decision was arguably based on the court’s interpretation of the contract in question. Nevertheless it has been treated in subsequent cases as establishing a general rule that there is no implied right to pay wages in lieu of notice.

      • Employers therefore are advised to include an express power

      • Could try an argue that it is a term implied in fact because it’s so common, but this might be a weak argument

    • If payment in lieu is made, when does the contract end?

      • On the day notice is given. An employer is not entitled to back date notice.

• Statutory Notice Periods

  • The statutory notice periods will apply to any person who is covered by the FWA

    • S 117 is separately extended by Division 3 of Part 6-3 to apply to non-national system employees as well, subject to the same exclusions

  • s 117 FWA(1) an employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).

    • Notice must be given by delivering it personally, or leaving it at the employee’s last known address, or sending it by pre-paid post to last known address according to section 28A and 29 of the Acts Interpretation Act 1901.

      • The notice must be in writing; although a text message is sufficient Guirguis v Ten Twelve 2012

    • The notice period must not coincide with a period of leave LHMU v Cuddles Management 2009

  • s 117(2) The employer must not terminate the employee’s employment unless they meet the minimum period of notice or they have paid to the employer has paid them in lieu of notice the amount they would have been liable to pay, at the full rate of pay, up until when notice would have had to be given

  • Notice period s 117(3)(a)

    • Not more than 1 year = 1 week’s notice

    • 1-3 years = 2 weeks’ notice

    • 3-5 years = 3 weeks’ notice

    • More than 5 years = 4 weeks’ notice

    • 117(3)(b) then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given

  • Some employees are excluded from these notice provisions s 123 FWA

    • Casuals

    • Trainee (other than apprentice) on a training arrangement

    • Employees hired for a fixed term of for a specific task or specific season

    • Where the employee is guilty of ‘serious misconduct’ (summary dismissal)

      • Fair Work Regulations Reg 1.07 (meaning of serious misconduct)

        • Wilful or deliberate behaviour inconsistent with continuation of the contract

        • Conduct that causes serious and imminent risk to H&S of any person, OR the reputation, viability, profitability of emr’s business

        • Fraud, theft, intoxication (so impaired that the employee is unfit to be entrusted with the employee’s duties), assault; refusal to carry out lawful & reasonable order of the employer

    • Note: However, under (2) this won’t prevent this Division from applying if a substantial reason for employing the employee as described above was to avoid the application of this Division.

• Summary Dismissal

  • General principle: Conduct that warrants summary dismissal of an employee is conduct that is not merely a breach of contract, but a radical breach of the relation of employee and employer which is inconsistent with the continuance of that relation: see Adami v Maison De Luxe [1924] HCA

  • Under the common law, a party to a contract has the right to terminate in response to any breach of an essential term, a fundamental breach, or a repudiation by the other party

  • Is it a repudiatory breach?

    • Repudiation occurs where a party indicates that they are unwilling or unable to perform their obligations in a significant respect

      • Where the act ‘evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations…The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it…’ Koompahtoo case, (2007) 241 ALR 88

      • Might include a series of minor breaches, which on their own would not be too serious, but which taken cumulatively show a disregard for the obligations imposed by the contract Hill v Compass Ten 2012

      • Courts may look at the motivations of the employee in doing the act North v...