Employment contracts is a mandate to include a notice of termination

The Federal Circuit Court, Australia recently passed its verdict on the requirement of a notice of termination clause in an employment contract. This comes as the conclusion to a case where the applicant contended that she was summarily dismissed from the respondent company, where she worked for over 19 years. The respondent maintained that the dismissal was affected following an investigation into various allegations against the applicant. 

As part of the proceedings, the Federal Circuit Court deliberated whether or not the applicant’s conduct warranted her dismissal. Another issue considered by the Court was whether the applicant’s employment contract required a notice of termination or whether a period of “reasonable notice” would suffice.

The Court referred to the employment contract of the applicant which expressly stated that the contract would be governed by the rules and regulations set forth by the appropriate Australian government authority(ies) between employer and employee. Upon further inquiry, it was found that this reference to rules and regulations was vague and inconclusive. 

The applicant’s employment contract also included an implied term of termination. The Court further noted the applicant’s lengthy employment period at the respondent company and salary could be attributed to "reasonable notice". 

Based on the testimonies presented, the Court held that the respondent was not entitled to summarily dismiss the applicant, and the applicant was entitled to a nine-month notice period of termination. In concluding thus, the honorable court considered several factors, including the applicant’s length of service, age, qualifications, and experience. It noted the applicant’s lengthy employment period at the respondent, her significant salary, and her difficulty obtaining comparable employment in the years since her termination. 

The court also dictated that the terms of an employment contract may be express or implied, but employers should aim to be as explicit as possible when drafting contracts. Furthermore, the employment contract should contain the period of notice that an employee is entitled to upon their termination.