Kuczmarski v Ascot Administration Pty Ltd - [2016] SADC 65

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
KUCZMARSKI v ASCOT ADMINISTRATION P/L
[2016] SADC 65
Judgment of His Honour Auxiliary Judge Clayton
1 July 2016
EMPLOYMENT LAW - CONTRACT OF SERVICE
IMPLIED TERMS - TERM THAT EMPLOYMENT NOT BE TERMINATED EXCEPT ON REASONABLE NOTICE NOT IMPLIED INTO EMPLOYMENT CONTRACT WHERE s 117 OF FAIR WORK ACT 2009 (CTH) APPLIES.
Contract of employment terminated by defendant on account of redundancy. The contract made no reference to termination. Plaintiff alleged a term requiring reasonable notice should be implied into the contract as a matter of law. The employment was subject to s 117 of the Fair Work Act 2009 (Cth) which provided that the employer should give 'at least' the 'minimum notice' prescribed by the Act.
Held:
There was no necessity for a term requiring reasonable notice to be implied because a provision establishing the employee's entitlement to notice was contained in s 117. There was no gap that needed to be filled. Claim dismissed.
Fair Work Act 1994 (SA) ; Fair Work Act 2009 (Cth) s 117; Industrial Relations Act 1988 (Cth) ; Industrial Relations Act 1984 (TAS) , referred to.
Byrne v Australian Airlines Ltd (1995) 185 CLR 410; Thorpe v South Australian National Football League (1974) 10 SASR 17; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; Brennan v Kangaroo Island Council (2013) 120 SASR 11; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567; Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284; Westen v Union des Assurances de Paris No 2 (1996) 88 IR 268; Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 67 IR 162; Elliott v Kodak Australasia Pty Ltd (2001) 108 IR 23; Australian National Hotels Pty Ltd v Jager (2000) 9 Tas R 153; Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; Guthrie v News Ltd (2010) 27 VR 196, considered.

KUCZMARSKI v ASCOT ADMINISTRATION P/L
[2016] SADC 65

The plaintiff was employed by the defendant and other companies in the Scott Group of Companies from 1 July 2002 until 21 April 2015. It is unnecessary to identify the actual periods during which the plaintiff worked for different companies within the group.
On 21 April 2015 the plaintiff was advised by the defendant that his position had been made redundant with his employment terminating immediately. He received payment of accrued annual leave and long service leave, severance pay, and five weeks pay in view of notice. Five weeks was the period of notice prescribed by s 117(2) of the Fair Work Act 2009 (Cth).
The plaintiff had been employed by the Scott Group as the National Group Human Resource Manager. No contractual terms of employment regarding the notice to be provided upon termination of employment had been reduced to writing and the plaintiff’s employment was not subject to any award. At the time of his employment the plaintiffs total remuneration package, including a motor vehicle and superannuation, was $152,322 per annum.
Section 117(2) of the Fair Work Act 2009 provides:
(2) The employer must not terminate the employee’s employment unless:
(a)the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b) the employer has paid to the employee (or to another person on the employee's behalf) payment in view of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee's behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
Subsection 117(3) of the Fair Work Act contains a table prescribing the minimum period of notice. The plaintiff was entitled to four weeks notice for more than five years continuous service plus one further week because the plaintiff was over 45 years of age and had completed at least two years of continuous service.
The plaintiff's case is that notwithstanding s 117(2) of the Fair Work Act a term should be implied in his contract of employment that he was entitled to reasonable notice of termination. He claims that the period of five weeks pay in lieu of notice was inadequate and constituted a breach of contract. He claims damages.
In opening the plaintiff's case, Mr Livesey QC with Mr Dowd suggested that having regard to the nature of the plaintiff’s position in the Scott Group of Companies a period of 12 to 18 months notice would have constituted reasonable notice.
I mention in passing that the Fair Work Act was introduced during the plaintiff’s employment with the Scott Group of Companies but prior to him transferring his employment to the defendant Ascot Administration Pty Ltd on 1 July 2014.
The defence case is that the plaintiff's employment was determinable without cause subject to the provision of notice as required by s 117 of the Fair Work Act, that the defendant made payments in lieu of the appropriate period of notice so that the termination of the plaintiff's employment was lawful and the plaintiff has no claim for damages.
Two fundamental questions arise for consideration. First, was the plaintiff’s contract of employment subject to an implied term that he was entitled to reasonable notice of termination of employment? The defendant contends that s 117 of the Fair Work Act expressly provides for the minimum statutory period of notice so that no term entitling the plaintiff to reasonable notice upon termination of employment should be implied into the contract of employment. Secondly, if the plaintiff was entitled to reasonable notice, what period of notice would have been reasonable?
The case centred around the argument whether s 117 excluded the implication of a term that reasonable notice be provided. It is to be noted first that s 117(2) directs that a period of notice should be ‘at least’ the period of minimum notice and secondly that the section refers to ‘the minimum period of notice’ as opposed to a ‘reasonable’ period of notice.
Mr Livesey argued for the plaintiff that where there is no stipulation in the contract of employment a period of reasonable notice should be implied as a matter of law.
He referred to Byrne v Australian Airlines Ltd[1] where Brennan CJ, Dawson and Toohey JJ discussed the circumstances in which terms will be implied into a contract of employment. That judgment was referred to by both counsel and it is referred to in many of the other cases to which counsel referred. It is appropriate to set out the relevant passage in the reasons of their Honours in full:
Implied Term
The implication which the appellants seek to make is based upon the presumed or imputed intention of the parties. In that context, the remarks of the majority in the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings … are frequently called in aid: ‘(1) [the implication] must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract. ‘In laying down those criteria, it was recognised that there was a degree of overlap. Further, as Deane J has observed …, the cases in which the criteria in BP Refinery (Westernport) Pry Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J in these terms …:
‘The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.
That is, we think, the appropriate test to apply in this case and the answer must be that it is not necessary to imply a term in the form of cl 11(a) for the reasonable or effective operation of the contract of employment in all the circumstances. In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach. Clause 11(a) may alter that position, but there is no reason to presume that any alteration was intended by the parties to form a term of their contract, nor any reason to impute such an intention to them. Plainly, the fact that the inclusion of such a term would, if it were breached, support an action for damages by the employee is no ground for saying that the term is necessary for the reasonable or effective operation of the contract. The contract is capable of operating reasonably and effectively in the absence of such a term and in the presence of an award provision offering limited remedies in the event of breach. The argument that cl 11(a) constituted an implied term of the contract of employment should be rejected.
[1] (1995) 185 CLR 410 at p 422.
Reference was also made to p 429 of the reasons where their Honours observed that termination of employment in breach of a provision would have been breach of the award in that case and:
… It is a different question whether a dismissal, if wrongful, otherwise amounts to a breach of contract sounding in damages. In the absence of anything to the contrary and putting to one side the provision in the award for notice, at common law a contract of employment for no set term is to be regarded as containing an implied term that the employer give reasonable notice of termination except in circumstances justifying summary dismissal…
Mr Livesey observed that a footnote referred to the decision of Jacobs J in Thorpe v South Australian National Football League[2]. He submitted Thorpe was his client's case.
[2] (1974) 10 SASR 17 at p 29.
Thorpe is a decision which has stood the test of time. Although it is now 40 years old Thorpe is still good law. The difference between Thorpe and the present case is that in Thorpe there was no award or statutory provision such as s 117 which dealt with the period of notice.
Mr Livesey also referred to Commonwealth Bank of Australia v Barker[3]. In the reasons for judgment of French CJ, Bell and Keane JJ, their Honours said:
The implied term of mutual trust and confidence in the United Kingdom
Employment contracts have attracted a number of implied terms in the course of the evolution of the employment relationship. All such terms are subject to the express provisions of the particular contracts and any applicable statutes. They include an implied duty imposed on the employer to provide the employee with a safe system of work … and to give reasonable notice of the termination of the contract other than for breach.
[3] (2014) 253 CLR 169 at p 190.
Earlier in their reasons their Honours discussed ‘The Implication of Terms’[4] saying:
Courts have implied terms in contracts in a number of ways:
•in fact or ad hoc to give business efficacy to a contract …;
•by custom in particular classes of contract …;
•in law in particular classes of contract; or
•in law in all classes of contract.
Contractual terms implied in law may be effected by the common law or by statute. If effected by the common law they may be displaced by the express terms of the contract or by statute.
[4] Ibid at p 185 [21].
Mr Livesey submitted that the first issue between the parties was whether the case comes within Byrne, Barker and Thorpe or whether the case is confined by s 117 of the Fair Work Act. He foreshadowed that the argument might be put against the plaintiff that s 117 leaves no room for the implication of a term because it addresses notice.
Mr Livesey pointed out that s 117 addresses ‘minimum’ notice and that there is the requirement to provide ‘at least’ the specified period of notice. He submitted that the common law and the section address different matters. One provides a minimum while the other articulates that which is reasonable.
Mr Livesey referred to a learned article by Mr Irving which identifies a number of cases decided since the introduction of the legislation in which reasonable notice was required and which did not regard the statute as ousting the term implied by law. He also referred to The Modern Contract of Employment[5] and submitted:
… In that text the authors make it clear that awards or statutes don’t usually grant the right to terminate on specified notice; instead they provide minimum notice and that doesn't preclude the implication of a term to which I've referred.
[5] SC Neil, I. and Chin, D. The Modern Contract of Employment, Thomson Reuters Australia, 2012.
Mr Livesey sought to distinguish the decision of the Full Court of the Supreme Court of South Australia in Brennan v Kangaroo Island Council.[6]
[6] (2013) 120 SASR 11.
In Brennan Judge Cole, at first instance and then the Full Court on appeal, held that there was no implied term that the employer was obliged to give reasonable notice of termination because the implication of an obligation to give reasonable notice was not necessary to give business efficacy to the appellants employment contract; the existence of an award provision had the result that the employment arrangement was effective without any need to imply an obligation to give reasonable notice and that because of the existence of an award provision it could not be said that the implication of such a term would have been accepted by the contracting parties as a matter so obvious as to ‘go without saying’.
In Brennan the South Australian Municipal Salaried Officers Award required employers to give the period of notice prescribed by the award. The award had been made under the Fair Work Act 1994 (SA). Prior to 1 January 2010 the employment of the appellant had been subject to an award made under the Fair Work Act 2009 (Cth). Clause 3.2.1.1 of the operative award provided that in order to terminate the employment of an employee the employer must give the period of notice specified in a table. In some ways the table was similar to s 117(2), but it did not require ‘at least’ the prescribed period and it did not refer to a ‘minimum’ period of notice.
Mr Livesey argued that Brennan can be explained by reference to the way in which the case had been argued at first instance. He said that Brennan was like Byrne in that there was no room for implication because of the operation of an award. He said that because of the operation of the award there was no room for implication as a matter of law and the plaintiff was forced to resort to the argument that there was some other basis for the implication of the term. He pointed out that the argument of counsel at first instance was that the term requiring reasonable notice was to be implied as a matter of custom and her Honour observed that there was no evidence before her of such a custom.[7] Mr Livesey distinguished Brennan on that basis.
[7] [2013] SADC 99 at [32].
Mr Livesey submitted that because of the facts the decision in Brennan does not apply to a case such as the present. He said on the facts of Brennan the award applied ‘and so it’s a Byrne case’. He acknowledged that the High Court in Byrne made it clear that where an award stipulates a period of notice then that has the effect of ousting the implied term at law. He referred to Byrne, Barker and Jacobs J in Thorpe. Mr Livesey submitted that a term requiring reasonable notice should be implied in the present case as a matter of law.
He submitted that there being no award, there being no contrary term, the various indicia outlined by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings[8] are not to the point; Likewise not to the point, he submitted, are the matters to which Parker J had regard to in Brennan[9] at para 34.
[8] (1977) 180 CLR 266.
[9] T9 l5.
Mr Livesey submitted that the indicia used in determining what is reasonable notice can be traced back to the decision of Ashley J in Quinn v Jack Chia (Australia) Ltd[10]. Ashley J referred (at p 580) to Macken et al, Law of Employment, pp 157-158 which listed pertinent considerations including the duration of the hiring; industry practice; the seniority of the position held; the importance of the position held; the size of the salary; the worker’s age; the worker’s length of service; what the worker gave up to come to the present employer; the workers prospective pension or other rights.
[10] [1992] 1 VR 567.
When it was suggested to him that for present purposes s 117 has the equivalent effect of an award, Mr Livesey argued that a provision providing for minimum notice is directly in conflict and inconsistent with a term as to reasonable notice. He said those two things are not the same and referred to a passage in The Modern Contract of Employment at para 11.51 where it is stated:
“Awards and statutes usually do not grant the employer a right to terminate on specified notice. Instead they grant to an employee a right to a minimum period. Such statutory and award provisions do not preclude the implication of a term requiring reasonable notice.”
In support of that proposition the learned authors refer to the decision of the High Court in Kilminster v Sun Newspapers Ltd[11]. Mr Livesey suggested that Kilminster established that what was prescribed in the relevant award did not preclude the availability of a term as to reasonable notice. In very brief reasons for judgment in Kilminster the Court stated:[12]
We are all of opinion that the provisions of clause 22 of the award merely mean that the employment shall not be put an end to unless notice as therein prescribed shall be given, and they do not interfere with the rights of the parties with respect to longer notice by contract or otherwise…
[11] (1931) 46 CLR 284.
[12] At p 289.
The headnote to the report of Kilminster states the plaintiff had entered into an agreement which provided that he should remain in the service of the defendant company until the expiration of reasonable notice to be given by either party. If that was correct there was an express term and Kilminster was not a case where a term requiring reasonable notice was to be implied. However the record of the arguments of counsel casts doubt on whether there was an express term or whether the term was implied.
Mr Livesey was asked whether the four considerations listed in BP Refinery applied in the present case. He responded that the approach of the courts is not to apply those criteria as might be done in a case where implication is a matter of fact or custom, and that in a case such as this the implication is by operation of law. In Byrne the first passage to which Mr Livesey referred states:[13]
…In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach …
[13] At p 422-423.

In the other passage in Byrne to which Mr Livesey referred, Brennan CJ, Dawson and Toohey JJ repeated that a contract of employment is to be regarded as containing an implied term that the employer give reasonable notice of termination ‘In the absence of anything to the contrary and putting to one side the provision in the award for notice…’.
Mr Livesey submitted that where there is no provision in the award and no express provision in the contract the common law supplies the deficiency[14].
[14] T176-177.
Mr Livesey relied on the comments in an article by Mr Irving which discussed the decision in Brennan. The topic of the article was the assessment of the length of reasonable notice but before discussing that topic Mr Irving digressed to comment on the decision in Brennan which was criticised on four grounds.
First, the author said that Brennan assumed that the term governing reasonable notice could only be implied in fact whereas it is settled law that the term is implied in law, not in fact. The author argued that the court applied the wrong test. In the present case the plaintiff argued that the term should be applied as a matter of law.
Secondly, the author said that the award clause in Brennan only regulated notice to be given by the employer so that to accommodate cases where the employee wished to resign a term would need to be implied.
Thirdly, the author suggested that the award clause in Brennan was distinguishable from s 117(2) of the Fair Work Act on the basis the section requires ‘at least’ the period of notice and refers to the required notice as ‘the minimum period of notice’. The award clause in Brennan made no reference to those criteria.
Fourthly, the author referred to Kilminster and suggested that the term being considered in that case was probably an implied term, although the matter is not beyond doubt. Whether that is correct is arguable. I have already referred to the statement in the headnote to that report. In any event, it does not follow from Kilminster that Brennan was wrongly decided.
The author concludes with the statement:
The approach in these cases can largely be synthesised as follows. The term requiring reasonable notice is a term implied in law. Like any implied term, it is not implied when the implication is inconsistent with a statutory provision (or an award given force through a statute). Whether a statute has that effect in part depends on the terms used in the statute or award and the intent of the maker of that instrument.
In his written reply, Mr Livesey referred to Westen v Union des Assurances de Paris No 2[15]. In that case the relevant award provided that the employment of an employee should not be terminated ‘without at least’ a specified period of notice. The provision is similar to s 117. Madgwick J said:[16]
The clause does not say, nor does it necessarily imply, that the right of reasonable notice, for employees for whom such notice might be months longer than four weeks, is to be abolished or made inoperative. The award can have a sensible and reasonable operation if it is read as meaning that an employer’s obligation to give reasonable notice is assumed and endures, but, reasonable or no, the employer must give the minimum periods of notice prescribed in the award.
[15] (1996) 88 IR 268.
[16] Ibid at p 279.
Later Madgwick J observed that nothing in the Industrial Relations Act 1988 (Cth) empowered an award to reduce the rights of non-unionists and said:[17]
The consequence is that the award could not affect the implied contractual right of a non-unionist to more than four weeks’ notice if that were reasonable…
[17] Ibid at p 279.
Also His Honour said:[18]
It is clear from the above that, in my view, it is unnecessary to venture into the doctrinal difficulties apparently seen as possible in Byrne v Australian Airlines by Brennan CJ et al. It is also clear that, in this case, there is no reason to doubt, indeed every reason to confirm, the implication of a requirement that Mr Westen should have had reasonable notice of his termination.
[18] Ibid at p 280.
If that was a current statement of the law I would have been inclined to find that s 117 did not affect the implied contractual right to reasonable notice. However, it is necessary to have regard to the developments since Westen was decided. Also it was not, in my respectful opinion, appropriate to treat Byrne in the way that Madgwick J did.
In Brennan Parker J disapproved the decision in Westen as being inconsistent with Byrne (Brennan [52]), Brackenridge v Toyota Motor Corporation Australia Ltd,[19] Elliott v Kodak Australasia Pty Ltd[20] and Australian National Hotels Pty Ltd v Jager.[21] Westen is inconsistent with Westpac Banking Corporation v Wittenberg.[22] I decline to follow Westen.
[19] (1996) 67 IR 162.
[20] (2001) 108 IR 23.
[21] (2000) 9 Tas R 153.
[22] [2016] FCAFC 33.
The plaintiff’s written reply set out a passage from the reasons of Kaye J in Guthrie v News Ltd.[23] It is appropriate to consider the whole paragraph which states:
In determining the applicable period of notice, I do not consider that much guidance is obtained from the Fair Work Act 2009, upon which Mr Attiwill relied. Section 123(1) provides that Division 11, in which s 117 is located, does not apply to an employee who is employed for a specified period of time. Thus, s 117 would not have applied to Mr Guthrie’s contract, in February 2010. Further, and in any event, s 117(3) only provides for the ‘minimum period of notice’ to be provided to an employee. The Fair Work Act applies to a wide variety of employees. By prescribing the minimum period of notice, the Act does not, it seems to me, cast light on the appropriate period of notice, which should be given to an employee in Mr Guthrie’s position. In such a case, the minimum period provided by the Act, namely five weeks, would have been wholly inadequate, in light of the factors which are involved in the assessment at common law.
[23] (2010) 27 VR 196 at [197].
Mr Guthrie’s contract of service contained provisions that the period of employment would terminate after three years and that the employment could be terminated at any time if he committed ‘any act of serious misconduct’. On its facts Guthrie is different from the present case.
Mr Livesey submitted that nothing in s 117 impedes the legal operational practical effect of an implied term about reasonable notice and that s 117 can easily coexist with an implied term about reasonable notice. He argued there is no conflict and no inconsistency.[24] That is not an answer to the defendant’s argument that a term will only be implied either in fact or as a matter of law where there is necessity or a gap to fill.
[24] Written Reply [27].
Mr Whitington QC who appeared with Mr Besanko for the defendant also referred to the passage in Barker[25] where French CJ, Bell and Keane JJ discussed the implication of terms. He argued that before a term is implied in fact or by law it must be ‘necessary’ for such a term to be implied. He referred to various passages in Barker and said that the ‘necessity’ which will support the implication of a term by law is demonstrated where, absent the implication, ‘the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined’ or the contract would be ‘deprived of its substance, seriously undermined force drastically devalued’.[26]
[25] At p 185.
[26] At p 185 [21]; Outline of Argument at [21].
Mr Whitington submitted that while the common law will imply a term that a contract of employment may be terminated on reasonable notice into a contract which makes no provision for termination, such a term will only be implied when it is necessary to do so. It was submitted that it is not necessary for such a term to be implied in this case given the existence and operation of s 117 of the Fair Work Act.[27]
[27] Written Outline of Argument a [29].
Mr Whitington referred to the judgment of Buchanan J (with whom McKerracher and White JJ agreed) in Wittenberg. Buchanan J said:[28]
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.
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.
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. (my underlining)
[28] At pp 216-218.
In his reasons Buchanan J referred to Jager and to Brennan.
In Jager, Evans J (with whom Underwood and Crawford JJ agreed) held that the trial judge had erred in finding that it was an implied term in fact in the employee’s contract of employment that the contract could be terminated on reasonable notice in light of s 47(2) of the Industrial Relations Act 1984 (TAS), which provided that a term or period of service of employment, that is of indefinite duration, is terminable by minimum periods of notice which were specified. Buchanan J then stated:[29]
[29] In Wittenberg at p 234-238.
Jager and Brennan were criticised in written submissions for the employees on the basis that the two Full Courts misunderstood the difference between implications of law and implications of fact. In my view, the criticism is misplaced. The essential point, applicable to both forms of implication in the current circumstances, is that there was no gap to be filled by the implication.
Those various approaches (bearing in mind the statutory source of awards) are consistent with a general statement of principle by the majority in Byrne v Australian Airlines Limited (1995) 185 CLR 410 (“Byrne”) at 422-423:
... In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach. ...
(Emphasis added.)
The minority judgment in Byrne said (at 449-450):
... terms of this kind, although treated as implied by law, may be excluded by express provision made by the parties and also as a result of inconsistency with terms of the contract. The result is that, even if treated as rules of law, they only apply in the absence of an expression of contrary intent.
(Emphasis added.) (Footnote omitted.)
In most cases there will be no practical difference arising from the two formulations as to their particular effect concerning contracts of employment. In each case the possible implication is, in my respectful view, secondary, subordinate and tied to questions of necessity in order to make the contract effectively operative. The implied term of reasonable notice does not represent the imposition of a judicial rule or standard. The courts have not set out to rewrite individual contracts of employment.
In the present appeals, the question is whether (as the employees submit) a term requiring reasonable notice may be implied into a contract and co-exist with a provision giving rights of termination on specified periods of notice. In my view, such a term of reasonable notice cannot be implied in such a circumstance. It would derogate from existing contractual rights. It would be inconsistent with express terms of the contract. It must be regarded as excluded. (my underlining)
Mr Whitington submitted that a term that a contract of employment may be terminated upon reasonable notice will only be implied by law where it is ‘necessary’ to do so in the sense that it is necessary (not just reasonable) to imply the term in order to prevent the enjoyment of the rights conferred by the contract of employment being rendered nugatory or worthless or seriously undermined, or the contract being ‘deprived of its substance, seriously undermined or drastically revalued’.[30]
[30] Written Outline of Argument [40] referring to Wittenberg at [234].
He submitted that where termination on notice is dealt with in a contract, award or act it is not ‘necessary’ to imply the term because the topic has been addressed.[31]
[31] Written Outline of Argument [42].
He submitted that it is not ‘necessary’ to imply by law a term into the contracts between employers and employees which are subject to s 117 of the Fair Work Act because Parliament has provided for a period of notice in s 117.[32]
[32] Written Outline of Argument [44].
He argued that the fact that s 117 only provides for a minimum period of notice is not to the point .Whilst s 117 imposes a minimum obligation it is not ‘necessary’ to imply the term requiring reasonable notice because Parliament has already imposed an obligation on employers to give a period of notice.[33] There was no relevant ‘gap to fill’ in light of the operation of s 117 of the Fair Work Act.[34]
[33] Written Outline of Argument [45].
[34] Written Outline of Argument [51].
I accept those submissions.
The second argument for the defendant was that if, notwithstanding the judgment of Buchanan J in Wittenberg, the common law implies a term requiring reasonable notice into all contracts of employment unless excluded by express agreement or displaced by an award or statute, s 117 of the Fair Work Act displaces or excludes that term.[35] Counsel submitted that s 117 of the Fair Work Act displaces or precludes any implication by law or fact of a term requiring reasonable notice.[36] Counsel relied on Jager in support of that proposition.
[35] Written Outline of Argument [52].
[36] Written Outline of Argument [58].
Counsel submitted that the plaintiff’s contention that s 117 of the Fair Work Act does not displace the implied term because s 117 only provides for a minimum period of notice is without merit.
First, because the existence of s 117, which provides for a period of notice of termination, whether expressed as a minimum period otherwise, means that it was not ‘necessary’ to imply such a term on the basis that without such a term the contract could be rendered nugatory or worthless or seriously undermined, or ‘deprived of its substance, seriously undermined or drastically devalued’.[37]
[37] Written Outline of Argument [61].
Secondly, because by prescribing a minimum period of notice, Parliament has recognised that the parties to an employment contract can expressly agree a longer period of notice and Parliament is to be taken to have intended to have excluded the implied term of reasonable notice by enacting s 117.[38]
[38] Written Outline of Argument [62].
Thirdly, because by creating a minimum standard or safety net s 117 has affected the contracts of those employees who would have been entitled to a period less than the periods prescribed in s 117. It was argued ‘the better reading of s 117 is that it excludes or displaces the implied term, sets a minimum standard or ‘safety net’ and leaves the parties to contracts of employment free to agree expressly a greater period of notice should they wish to do so’.
I also accept those submissions.
I have considered the arguments of Mr Livesey but cannot see any reason why I should not follow Brennan.
Ms Brennan applied to the High Court of Australia for special leave to appeal. Leave was refused. In brief reasons Bell and Gageler JJ, who heard the application for special leave, said that ‘The Full Court’s analysis is consistent with the statements in Byrne v Australian Airlines Limited’.
In Brennan Parker J concluded:
I find that the implication of an obligation to give reasonable notice was not necessary to give business efficacy to the appellant’s employment contract. The existence of the award provision, albeit that it operated outside the contract, had the result that the employment arrangement was effective without any need to imply an obligation to give reasonable notice, ie there was no gap that needed to be filled. Furthermore, because of the existence of the award provision it could not be said that implication of such a term would have been accepted by the contracting parties as a matter so obvious as to ‘go without saying’.
I have already referred to Mr Livesey’s attempt to distinguish Brennan on the basis that case was concerned with the implication of a term in fact whereas the present plaintiff submits that the term should be implied as a matter of law. On that question I accept the defendant’s submission that any criticism of Brennan on the ground that it failed to appreciate the distinction between terms implied in fact in terms implied by law is misplaced in the light of the remarks of Buchanan J in Wittenberg[39] which are set out above.
[39] At [216] and [217].
I find that because s 117 of the Fair Work Act deals with the period of notice required to terminate a contract of employment it is unnecessary to imply into the plaintiff’s contract of service a term that reasonable notice of termination be provided. There is no gap that needs to be filled.
Thorpe does establish that the court will imply a term requiring that reasonable notice be provided to determine employment of indefinite duration. However, in that case there was no award or statutory provision dealing with the topic and Jacobs J was not required to fill the gap.
Byrne establishes that the law regards it as a term of the contract that it should be terminable upon reasonable notice but the proposition was qualified by the words ‘in the absence of any provision in the award and of any express provision in the contract of employment’[40] and ‘in the absence of anything to the contrary’.[41] Because of those pre-requisites Byrne does not support the plaintiff’s case.
[40] At p 422.
[41] At p 429.
In my opinion Wittenberg and Jager do support the defendant’s case. So does Brennan which I am bound to follow.
I accept the defendant’s argument that the fact that s 117 talks of a ‘minimum’ period of notice and of the need for ‘at least’ that period is inconsequential.
I find that because s 117 deals with the topic of the notice required to terminate a contract of employment there is no necessity for a term to be implied.
I find that the plaintiff has not established that it was a term of his contract of employment that reasonable notice was required to determine the contract.
If it was necessary for me to determine what period would have been required if the contract had been subject to a term requiring reasonable notice, having regard to the criteria discussed in Quinn and the evidence of the plaintiff, I would have found that a reasonable period of notice would have been six months.
It is unnecessary for me to assess damages.
There will be judgment for the defendant.