What is Reasonable notice of termination of employment where no written Contract?


NSW Supreme Court Awards Employee Three Months Wages as Reasonable Notice for Termination

In Ware v Amaral Pastoral Pty Ltd (No 5) [2012] NSWSC 1550 the NSW Supreme Court awarded a manager three months pay as reasonable notice for his termination of employment.

From January 2002 until March 2005 Mr Ware was employed by Amaral Pastoral to manage one of its farms. It was a full time roll in which Mr Ware was paid $30 per hour and entitled to four weeks annual leave.

Mr Brennan, a consultant for Amaral Pastoral prepared a document titled “Farm Manager Job Description” and provided it to Mr Ware. The document was not signed by the parties but was treated by the parties as having some contractual quality as it was referred to in conversations between Mr Brennan, Mr Ware, Mr Amaral (who was based in California investing in farms and ranches in the United States) and Ms Hamner, the Chief Financial Officer of Amaral Pastoral. Mr Ware pleaded that the “Farm Manager Job Description” document was the written component of an employment contract that was partly oral and partly written.

In March 2005 Mr Ware’s employment with Amaral Pastoral was terminated summarily. He was not paid any amount in lieu of notice.

Mr Ware sought payment of three months wages in lieu of notice. He claimed that in the absence of an express term prescribing a notice of termination period in his employment contract with Amaral Pastoral, it was an implied term that he would receive reasonable notice of his termination. In an attempt to defend this claim, Amaral Pastoral applied to the Court to amend its defence so as to allege conduct on behalf of Mr Ware to warrant his summary dismissal. This application was rejected.

The issue then for the Court was the length of notice for termination to which Mr Ware was entitled. While Mr Ware claimed he was entitled to three months notice, Amaral Pastoral claimed he was only entitled to one month notice.

In determining this issue, the Court considered the following circumstances:

(a) Mr Ware was 53 years old at the time he was dismissed;

(b) Mr Ware had worked in the position for almost three years;

(c) Mr Ware held a relatively senior position in that he was managing a substantial commercial enterprise;

(d) Mr Ware had considerable autonomy in his position as he was only accountable to Mr Amaral and occasionally to Ms Hamner.

Based on the above circumstances, the Court found that Mr Ware’s claim for three months wages could be established and that he was entitled to recover an amount representing the benefits he would have received had he continued to be employed by Amaral Pastoral from 10 March 2005 to 10 June 2005.

This case serves as a reminder to employers of the risks they expose themselves to when employment contracts are not put in writing or contain an express notice of termination period.

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