Notice and pay in lieu in Australian employment law

Sec 117 of the Fair Work Act (somewhat one-sidedly) contains a schedule of minimum periods of notice or pay in lieu which must be provided or paid for the termination of employment of an employee, except in the limited circumstances provided for by sec 1233, for example for serious misconduct. Does this provision have any effect upon the doctrine of reasonable notice which applies to common law contracts of employment? The answer is probably not, at least in the case of employees whose employment is not covered by a modern award.

“There remains a genuine controversy as to whether s.117 operates so as not to require the implication of a term of reasonable notice where an employee is not employed subject to an award. The decision of the learned Judge in Kuczarmarski (Clayton J) involves a comprehensive review of the relevant decisions that were referred to him by respective senior counsel and he considered in that case that s.117 operated so as to deal with the period of notice required to terminate a contract of employment where the employee was not covered by an award.
The learned Judge referred to Wittenberg, in particular to the judgment of Buchanan J at paragraphs [216] – [218], where his Honour said:
o 216. The implication of terms into particular classes of contract as a matter of law, rather than as an implication from the surrounding facts in a particular case, is grounded in the notion of necessity (Barker). In that respect, as has been from time to time observed, it is not always easy to see how the two classes of implication can be readily distinguished.
o 217. Thus, even in the case of an implication by law into a class of contracts it remains essential, in my respectful view, to bear in mind the “necessity” which compels the implication. And, in both cases, it is accepted that no implication may be made which contradicts the express terms of the particular contract.
o 218. It is generally accepted that the common law will imply a term that a contract of employment may be terminated on reasonable notice into such a contract which makes no provision for termination. In the present appeals it was argued that such a term is implied into every contract of employment unless excluded. The two propositions are different. The first is concerned with filling a gap; the second with establishing a position of primary operation.
Clayton J referred to that passage and held that the implication of a term of reasonable notice was not necessary because there was no gap to fill because of the operation of section 117[2].
Clayton J also distinguished a finding of Kaye J Guthrie v News Limited[27] where his Honour held that 117(2) provides only a minimum period of notice and that it did not apply to the plaintiff in that case who was employed pursuant to a contract of service that could be terminated after 3 years or otherwise at any time for serious misconduct. Clayton J held that the facts in Guthrie were distinguishable from the facts in the case before him. It is not clear why the difference in facts render the views of Kaye J inapplicable to the contract that Clayton J had to consider or why Kaye J was incorrect.
It was significant that it the detailed and comprehensive analysis of the authorities by Buchanan J in Witterberg, he did not state that s.117 operates so as to remove the need to imply a term of reasonable notice in the absence of a contractual term that prescribes notice.
Further, I think that it is significant that where the effect of s.117(2) is said the remove a common law right to reasonable notice of termination of employment, the section and the explanatory memorandum make no reference to this. In this regard, I refer to
FCT v Smorgan (1977) 16 ALR 721 at 729 where Stephen J states:
o “..a construction of a statute which interferes with the legal rights of the subject to a lesser extent and produces the less hardship is to be preferred…”
I think the better view is that s.117 is in that part of the Act dealing with National Employment Standards and is intended to provide a minimum period only. It does not displace a right to reasonable notice when the contract of employment is silent on the question of notice. By paying or giving the minimum period of notice under s.117(2), the employer will have satisfied the National Employment Standard and not be liable for a claim of breach of those standards. However, it is strongly arguable that payment or provision of that notice will not necessarily satisfy a claim for reasonable notice. The proposition may be tested where the employment of two employees is terminated. Both are over 45 years of age. One has worked for 5 years in a mid-range role, the other has worked for 25 years and worked her or his way up on a high level role. Both are employed under contracts that make no provision for notice of termination. I doubt that parliament intended that both would receive the same period of notice of termination by the enactment of s.117(2) of the Act.
McGowan v Direct Mail And Marketing Pty Ltd (2016) FCCA 2227 delivered 30 August 2016 per McNab J