The top five mis­takes employ­ers make when ter­mi­nat­ing employ­ment: No.1 Giv­ing inad­e­quate notice

When dis­miss­ing a full-time or part-time employ­ee — oth­er than one being dis­missed for seri­ous mis­con­duct – the Fair Work Act 2009 pro­vides for a manda­to­ry min­i­mum peri­od of notice to be pro­vid­ed (or an equiv­a­lent pay­ment made in lieu of notice).
The require­ment to give notice or pay­ment in lieu exists regard­less of the rea­son for the dis­missal (except­ing sum­ma­ry ter­mi­na­tion for seri­ous mis­con­duct) and so oper­ates whether the dis­missal is for rea­son of mis­con­duct, poor per­for­mance, redun­dan­cy, etc.

Sec­tion 117 of the Fair Work Act 2009 pro­vides for a slid­ing scale of notice to be giv­en rang­ing from one week to five weeks, depend­ing on the employ­ee’s age and length of ser­vice. In addi­tion, mod­ern awards or enter­prise agree­ments can pro­vide for more favourable notice peri­ods. For exam­ple, the Pro­fes­sion­al Employ­ees Award 2010 pro­vides for a notice peri­od of at least four weeks for all per­ma­nent employ­ees (or five weeks where the employ­ee is at least 45 years old and has at least two years con­tin­u­ous service)).

Fur­ther­more, employ­ment con­tracts can (and fre­quent­ly do) pro­vide for more gen­er­ous peri­ods of notice, espe­cial­ly for senior employ­ees. Con­tracts can­not, how­ev­er, pro­vide for less gen­er­ous notice peri­ods than are pro­vid­ed for in the Fair Work Act 2009, an award or an enter­prise agreement.

His­tor­i­cal­ly, where an employ­ee was with­out an employ­ment con­tract spec­i­fy­ing a peri­od of notice an employ­ee could make a claim for rea­son­able notice” based upon a peri­od of notice that a court con­sid­ered rea­son­able. For senior and long serv­ing employ­ees, this was some­times held to be a peri­od of up to 12 months. In recent times the ongo­ing avail­abil­i­ty of a claim for rea­son­able notice has been called into ques­tion, how­ev­er, the uncer­tain­ty in this area is one rea­son to clear­ly state the required notice peri­od in an employ­ee’s employ­ment contract.

Courts can award finan­cial penal­ties where employ­ers breach the notice pro­vi­sions in the Fair Work Act 2009 or in an enter­prise agree­ment or an award. In Cerin v ACI Oper­a­tions Pty Ltd & Ors [2015] FCCA 2762 an employ­ee was giv­en 28 days’ notice instead of the 30 days they were enti­tled to. Even though the finan­cial loss to the employ­ee was only $181.66, the employ­er was ordered to pay the employ­ee a penal­ty of $20,400 and its HR Man­ag­er ordered to pay a penal­ty of $1,020 (as well as being per­son­al­ly named in the judg­ment). Giv­en there were two days of hear­ings involved in reach­ing the deci­sion, one expects that the legal costs would have been sig­nif­i­cant too.

To avoid the risks of sim­i­lar penal­ties it is often advis­able for employ­ers to seek legal advice on cal­cu­lat­ing the notice peri­od to be giv­en when ter­mi­nat­ing an employ­ee’s employment.