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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.