January 2017

Reasonable notice - yet more to consider

Last August we drew attention to a number of decisions that the minimum notice requirements under section 117 of the Fair Work Act displaced any entitlement to reasonable notice.[1]  Just a few weeks later, there was a decision to the contrary.  We have been waiting to see if there would be an appeal from those decisions, but none yet.

It's worthwhile reviewing the decision, McGowan v Direct Mail and Marketing Pty Ltd,[2] to see how the arguments have developed.

What was the dispute about?

Mr McGowan claimed adverse action in being dismissed.  He also claimed reasonable notice, arguing the original written contract (which provided for limited notice) had been displaced when he was promoted.  He argued he was therefore entitled to reasonable notice.  Mr McGowan had been paid the five weeks notice under the contract.

His employer argued that even if the old contract had been displaced, section 117 of the Fair Work Act meant there was no reasonable notice but just the five weeks provided by the section.  The employer also argued it was also entitled to have dismissed Mr McGowan summarily and without any notice at all.

So the scene was set for arguments on all points.

The court’s decision

First up, the company was not able to argue for summary dismissal given it had already dismissed Mr McGowan on notice.  The law only allows an employer to argue a subsequent summary dismissal if more information has come to hand after the termination.  But there was no new information, so the company was stuck with dismissal on notice. 

Then the court turned to consider whether the history of the employment meant the original contract (containing express, but minimal notice) was still in operation.

The contract had a clause that said it continued to operate after any changes to the employment unless explicitly replaced.  At each change, the company had issued a letter saying new conditions formed part of the original contract as an amendment.  On that basis, the court concluded the original contract notice provisions continued to apply as they had never been displaced.

At that stage, the court could have avoided the argument about reasonable notice but proceeded to examine the point - perhaps in case of an appeal on other aspects of the decision.

Did the Fair Work Act displace reasonable notice?

The court closely examined previous decisions, in particular the decision of the Full Court of the Supreme Court of South Australia in Brennan v Kangaroo Island Council.[3] You may recall that it was the High Court’s refusal to grant leave to appeal from that decision which ignited the interest of those seeking to argue section 117 of the Fair Work Act displaced reasonable notice.

The Brennan case concerned particular notice provisions in an award. The Fair Work Act had more general application, and included the phrase “at least” (which did not appear in the Brennan award), so the court decided the analysis in Brennan did not follow for the Fair Work Act.

Perhaps the strongest argument was that section 117 in its terms did not convey an intention to interfere with existing legal rights.  For this reason the court concluded that the Fair Work Act did not displace any existing entitlement to reasonable notice.

A bit clearer – but still under a cloud

We now have a number of well-argued decisions, going both ways.  We still wait for the appeal that might return some certainty.  

The lesson, as always, is to make sure employment contracts are in writing, particularly with respect to periods of notice, so the question of whether there is reasonable notice, and how much, need never arise.

Author: Mark Paul



[1] Insight: Reasonable notice for termination of employment

[2] [2016] FCCA 2227

[3] [2013] SASCFC 151