How much notice do I need to give my boss?

Awards, enterprise agreements and employment contracts set out requirements for notice that must be given to terminate an employment contract for permanent employees. If you cannot find a clause in one of these agreements, notice will be implied into every single employment contract. This includes notice both under statute and at common law.

The law subscribes that the mandatory minimum period of notice (or payment in lieu) that an employer must give an employee. According to this section, for example, if an employee has worked for the employer for longer than 5 years, the employee must be given 4 weeks’ notice. The law further says that if the employee is over 45 years of age and has completed more than 2 years of continual service with the employer (not including casual employment), then that employee must be given an extra week’s notice on top of the required statutory notice.

Reasonable notice

There is a long common law history on what “reasonable notice” means. The courts will imply into any employment contract a period of “reasonable notice” according to the usual contract interpretation rules for implied terms. Notice at common law exists with the intention to assist an employee during their period of unemployment by offering them a wage in the form of damages while they find new employment. However, employees are still required to mitigate their losses by seeking alternate employment in the interim.

Interaction with statutory notice

Reasonable notice at common law is not displaced by the statutory notice requirements. Indeed, reasonable notice at common law is often significantly greater than statutory notice. In the most exceptional of cases, reasonable notice has been decided to be up to 2 years’ notice. Because of this huge disparity, the interaction between notice under statute and at common law has been the subject of recent disagreement in a string of decisions of the federal courts.

In a recent case, it was clarified that even where statutory notice under section 117 of the FWA applies, reasonable notice at common law is not excluded (McAlister at [205]). This was a strong departure from the same court’s earlier decision that reasonable notice is excluded where section 117 applies, according to Justice Clayton in McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227. As we can see, there is divided judicial opinion on the interaction between statutory and common law notice.

In Luc Daigle v SCT Operations Pty Limited [2021/00173343] His Honour Judge Montgomery followed McAlister and accepted Mr Daigle’s argument that Fair Work Act did not displace the common law concept of reasonable notice. This case was decided in August 2023 in the NSW District Court. Until the issue is determined by an appellate court there will be some considerable uncertainty about this issue.

In deciding the length of reasonable notice, the courts assess several factors, including:

• The length of service.
• The employee’s age.
• The employment.
• The availability of similar and accessible employment (including any formal qualifications the person may have).
• Whether the employee was induced to take up the employment and leave secure employment.

Cases where the employee is in a highly specialised field where they are unlikely to be able to find new employment are where greater damages are likely to be awarded.

Future considerations

It is important now more than ever to ensure that employee contracts include a binding notice clause. Otherwise, employers risk the court granting significant damages sums. Provided a specified notice provision in a contract equals or exceeds the minimum entitlement under section 117 of the Fair Work Act that provision will remove any entitlement for a claim for reasonable notice.

If you need employment law advice, at Kells we have a team of highly experienced employment lawyers who can assist you.