Can you afford a 10-month payout for unfair dismissal?

notice_webOne of the hairiest questions both employers and employees ask themselves is what exactly is the correct length of time an employee/employer has to give to end that employment relationship.

What should be a simple question is often made more complex by the fact that notice periods can, and will, vary based upon those circumstances which led to the employment ending as demonstrated below.

The standard notice period required to be given by an employer and employee are the same:

1 week:  If the period of continuous service is less than 1 year
2 weeks:  If the period of continuous service is more than 1 year but not more than 3 years
3 weeks:  If the period of continuous service is more than 3 years but not more than 5 years
4 weeks:  If the period of continuous service is more than 5 years

While these timeframes are generally standard across the board, there are certain contributing factors that will alter the amount of notice employers give to certain employees. Make sure you avoid the hidden pitfalls when terminating a staff member’s employment.  Check the 10 guidelines below to ensure that you are meeting your requirements as an employer or employee.

1)  Where the employment relationship has been terminated by the employer, an employee is entitled to an extra weeks’ notice if they are over 45 years old and have worked for the employer for at least 2 years.

2)  An Employer needs to give an employee written notice of their last day of employment by either:
a)  delivering it personally,
b)  leaving it at their last known address or;
c)  sending it by pre-paid post to their last known address.

3)  An employee who is resigning does not need to give written notice – they can give it verbally.  It is, however, recommended that an employer acknowledge their acceptance of a verbal resignation, especially where the employee was engaged other than as a casual.

4)  Notice is not required in the case of casual employment.  A 25% loading paid to casual staff is provided in lieu of entitlements to paid leave, notice of termination and redundancy (although there are some exceptions for long term casuals).

5)  Notice is not required in the case of serious misconduct.  This being conduct by an employee that is intentional and causes serious and immediate risk to the health and safety of a person, or the reputation, viability and profitability of the business.  Examples include theft or assault in the workplace.

6)  An employer can provide more notice than required in their relevant award, agreement or contract.  In this instance, the employee only has to work the minimum notice period, but can elect to work the extra notice at their own discretion.

7)  An award, employment contract or enterprise agreement can set out longer minimum notice periods.

8)  Where an employee fails to give notice, the Registered & Licensed Clubs Award allows an Employer to withhold monies not exceeding an amount that would have been payable had the employee worked their notice period.

9)  Where an employer has given notice of termination to an employee, they must be allowed up to one days’ time off without loss of pay for the purpose of seeking other employment (job search entitlement).  This time off is taken at times convenient to the employee and after consulting with the employer.

10)  Where the employment relationship is being terminated on the basis of a genuine redundancy, notice periods apply in addition to any severance payments.

11)  Where the employment relationship is being terminated on the basis of a genuine redundancy, the job search entitlement is extended to one day for each week of notice, however the employer can request proof of attendance at an interview prior to paying this entitlement.

Fair Work Updates

Recent decisions by the Fair Work Commission have highlighted the need to ensure employment contracts clearly provide express terms regarding notice of termination:

In the case of Susanna Ma v Expeditors Pty Limited (2014), the Fair Work Commission found the Employer was in breach of an implied term of the employment contract by failing to provide ‘reasonable notice of termination’.  Taking into account a number of mitigating factors (listed below) it was determined that reasonable notice payable by the employer was 10 months.

Some of the reasons that led to this outcome, included the fact that there were no express terms in the contract of employment regarding notice of termination.  This meant the Employer was required to provide reasonable notice of termination. At the time of termination, the employee was 49 years of age and had been a loyal employee for over 24 years;

  • The employee was responsible for a team of about 14 people who reported directly to them;
  • The employee held a position of significant seniority and trust for many years, reporting directly to a managing director who regarded her as trustworthy and honest, and observed that they worked with high attention to detail; and
  • The employee received a substantial remuneration package which was indicative of the high degree of responsibility they had and their dedication in discharging it.

This is yet another reminder of the importance of having detailed and defensible employment contracts when engaging any and all staff.

Whether you’re an employer having to make a hard decision, or an employee seeking fresh pastures, it is essential that employment contracts be reviewed to ensure there are ‘express terms’ within regarding notice of termination by the employer and the employee.  To find out more about your employment requirements, contact us on (07) 3878 9355 or email info@dws.net.au

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