Brett, you strongly recommend termination clauses. We approached the website that normally prepares our Employment Contracts. They don't use termination notices. I asked them why. They said they were not lawyers and couldn't give legal advice. This does not inspire me with confidence as I build legal documents on their website. Why are termination periods so important, doesn't the law set out the rules in this?
Unless you have a termination notice provision in your Employment Contract that says exactly how much notice an employee is entitled to, the Employee is entitled to what is called "reasonable notice". This is upon termination of employment.
For example, Victorian Courts have awarded anywhere up to 12 months pay in lieu of 'reasonable notice' and even more in New South Wales. The courts consider:
- what you promised about job security
- what you said to get your Employee to join you
- prospects of obtaining suitable, alternative employment elsewhere
- length of service
If an employee is older or has been with you a long time or has slim chances of getting employment again in the near future on similar terms then the Courts are inclined to award higher sums for reasonable notice. There is a good prospect that even employees covered by Modern Awards can sue their employers with no termination clauses in their Employment Contract.
5 weeks pay vs 10 month pay
In Susanna Ma v Expediters International Pty Ltd (2014) NSWSC 859 Sue's employer failed to include a termination notice period in her contract. Her boss paid her 5 weeks in lieu of notice. The court said Sue deserved 10 months of pay. Why? The lack of a termination notice period allowed the courts to consider:
- Sue's age - 49
- had been working for her employer for 24 years
- Sue had been unemployed since she was fired
- her chances of finding similar work were low
Together with the penalties, the sympathetic court gave her a staggering $1 million. All because her boss hadn't built an employment contract with a specialist employment law firm such as Legal Consolidated Barristers & Solicitors.