Dismissals: reasonable notice & minimum periods

Elton v Bywater Medical Management P/L [2011] QDC 114

In this decision Dorney QC, DCJ helpfully recited the authorities in respect of minimum and reasonable notice under employment agreements:

[22] I have been referred to many cases which were proposed as being comparable decisions to this one. Noting that White J in Macauslane held that minds may well differ, and reasonably, as to what might be reasonable notice in any set of circumstances (at 511 [5]), I conclude that six months constituted a reasonable period of notice in this case.

[23] While it might well be thought that the plaintiff’s concession, in cross-examination, that she was of the opinion that she could give four week’s notice for termination at her behest might be thought to circumscribe what the Court can do based on the notion of reciprocity, it is clear from the judgment of Holmes J in Macauslane that there is no underlying pattern of reciprocity so far as notice in Australian employment law is concerned: at 514 [18]. As remarked by Holmes J, at the highest, the notion of reciprocity may constitute as a factor to be taken into account in determining what is reasonable notice, particularly where a very substantial period of notice is required from the employee, with a correspondingly lengthy requirement being attributed to the employer: at 515 [21]. That circumstance does not exist here. Consequently, it is my view that the position of the employer here, concerning a need to hire a replacement, is very different from that of an employee seeking alternative employment.

[24] But such reasonable notice can only apply if either s 661(2) of the Workplace Relations Act does not require, without exception, a statutory period of notice or does not otherwise impose, as a very strong factor in determining reasonable notice, a template for the circumstances that exist here.

[25] Thus, it is necessary to consider what that Act imposes on, or requires as a factor influencing the terms of, the relationship in question.

Statutory Period of Notice

[26] It is accepted by both parties that if the Workplace Relations Act does impose a statutory term of notice which cannot be avoided by an agreement between the parties containing an implied term of reasonable notice, then the salary proffered, and accepted, in lieu of notice conforms with the requirements of s 661.

[27] The defendant, who raised this particular argument, relied primarily upon a decision in the Federal Magistrates Court of Bognar v Merck Sharp & Dohme (Australia) Pty Ltd [2008] FMCA 571. There, O’Sullivan FM distinguished an earlier case from the same Court (namely, Windross v Transact Communications Pty Ltd [2002] FMCA 145). The criticism made in Bognar was that the earlier decision did not appear to involve a consideration of the impact of the “statutory minimum” in the Workplace Relations Act or the application of an award provision providing for an “actual” rather than a “minimum” period of notice: at [114].

[28] The trouble with Bognar is that it was involved, in essence, with the application of an award provision which did provide for an actual rather than a minimum period of notice. So much appears for the consideration by O’Sullivan FM at [125] – [134]. Any further consideration in that case of s 661 is obiter.

[29] For the plaintiff, the primary case relied upon was Grout v Gunnedah Shire Council (No 2) (1985) 58 IR 67. The plaintiff also relied upon Stewart v Nickels [1999] FCA 888.

[30] I find the decision of Moore J in Grout to be of great assistance. Although he was considering the predecessor to the Workplace Relations Act, he was considering the section of the Industrial Relations Act 1988 (Commonwealth) which was in substantially similar terms. As analysed by Moore J, the section in question was in a part of the Act “which concerns the minimum entitlements of employees”. The relevant section was expressed to be a prohibition on termination unless the specified notice was given. Accordingly, if no notice was expressly agreed between an employer and employee, then the analogous section “does not operate to limit the period of notice that a Court would imply as reasonable notice by reference to the criteria that the common law has developed when determining damages for wrongful dismissal”: at 80. This was stated to be in contrast to sections in materially different terms which invest the employer with a statutory right to terminate irrespective of what the common law contractual rights of the parties, whether express or implied, are. When one examines, closely, the Part in which section 661 is placed, it is entitled “Minimum entitlements of employees”. By s 13(1) of the Acts Interpretation Act 1901 (Commonwealth), the headings of a Part into which any Act is divided “shall be deemed to be part of the Act”. Thus, if any ambiguity arises from the terms of s 661 by the use of the words “must not terminate” unless the “required” period of notice is given, or where the required amount of compensation instead of notice has been given or paid, then that ambiguity should be resolved in favour of there being merely a minimum standard set, rather than a mandatory requirement being placed upon the employment relationship. As context and purpose are important in interpretation, the context clearly provides that the purpose is that minimum standards are to be set. As remarked in the majority judgment in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, in determining the question of purpose, regard must be had to “the language of the relevant provision” and “the scope and object of the whole statute”: at 390-391 [93].

[31] Furthermore, it cannot be held that, when such a “minimum” period is set, it provides a benchmark for what is reasonable in all of the circumstances.

[41] The damages are therefore calculated as follows:

(a) Loss of Salary for six months $25,688.00
(b) Loss of Superannuation Benefits $2,311.92
(c) Four weeks’ payment by defendant $3,952.00
(d) Annual leave paid on termination $3,235.64
(e) Earnings from alternative employment for six months $10,939.00 $18,126.64
(f) Damages $9,873.28

[42] Interest has been claimed in the Amended Statement of Claim at 10% per annum from 3 April 2008.

[43] Since damages were accruing during the six month period from 3 April 2008 to 3 October 2008, interest should only be allowed at the rate of 5% per annum between those dates. Interest thereafter is allowed at 10% per annum.

Brisbane Barrister – David Cormack

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