workplace law

Pendlebury Workplace Law is a specialist workplace relations and employment law legal practice based in Sydney.

Recent Case in Federal Circuit Court Confirms Calculation of Reasonable Notice where no Written Contract

Miller v Sunland Park Pty Ltd [2014] FCCA 89 (31 January 2014) 

The Federal Circuit Court has awarded a general manager six (6) months’ pay upon finding no justification for his summary dismissal over personal spending on his company credit card. 

Sunland Park Pty Ltd (the Company) engaged the general manager on an oral contract with the Company’s owner.  The oral contract did not specify the notice to be given by either party to end the employment. 

After 13 months of service, the owner dismissed the general manager, accusing him of unauthorised spending while on an overseas trip on behalf of the Company. 

Justice Simpson found there was no basis for the summary dismissal.   His Honour preferred the general manager’s evidence that the owner had instructed him to utilise the Company credit card for personal items whilst travelling in Europe and in North America, and to reimburse the Company upon his return. 

His Honour said that as the employment contract had not been reduced to writing, its terms were to be found in conversations between the parties leading up to the general manager’s engagement as well as, “those terms that are to be implied as a matter of law“. 

His Honour said the general manager was entitled to damages that may be quantified “by determining the length of time that would be needed were the [Company] to have given [the general manager] reasonable notice of termination“. 

The general manager proposed that 12 months notice would be reasonable notice, however, the judge found that 6 months would be reasonable notice, taking into account factors including:

  • The general manager’s $60,000 salary,
  • Length of service with the Company,
  • Age,
  • Seniority in the Company,
  • Duties, and
  • The likelihood of him finding suitable employment elsewhere. 

His Honour supported the general proposition that, “The general rule is that the longer the employee has worked for the employer and the more senior and important the position they occupy, the longer their entitlement… Senior managers can generally expect at least 6 months’ notice even when they have been in their job for only a short period of time.” 

ImageJustice Simpson also observed that the Company had unlawfully suspended the general manager for one week without pay, the week prior to terminating his employment: “It is not permissible at common law for an employer to suspend an employee without pay even in circumstances where it is thought that the employee has breached his or her contract of employment in some way.  If an employer suspends, it must be on the basis that the employee continues to be paid their full entitlements”. 

Justice Simpson awarded the general manager $35,808 in damages, which included unpaid salary, annual leave and superannuation, as well as the 6 months’ notice. 

Use of Company credit card for personal items reasonable

Justice Simpson provided that the general manager’s use of the Company credit card for all expenditure, personal and business, while on the overseas trip accorded with some “common sense“, particularly because the Company was claiming some of the expenses from Austrade. 

Furthermore, he found that it would have been difficult for the general manager to determine whether a particular expense transaction was claimable as a business expense or a private expense. 

His Honour stated, “Far better to have all business and all private transactions made with the use of the one card and to then determine, on return to Australia, which items should be considered private (and therefore refundable to the Company) and which items business and therefore claimable in the submission to Austrade.” 

His Honour said that it did not accord with common sense that the general manager was using the credit card dishonestly as he knew that “very soon afterwards [the Company owner] would be able to see the entries on the Mastercard statement“. 

Summary Dismissal
His Honour found that if the owner believed the general manager was acting unlawfully, it was up to him to terminate his employment “as soon as he held that beliefAn employer exercising the power to summarily dismiss must act without undue delay. Undue delay may result in the employer waiving the employee’s breach of the employment contract.” 

Finally, Judge Simpson said the owner’s action in encouraging the general manager “to go on a lengthy and expensive overseas trip after he had only been with the company for eight months is hard to understand.  A more cautious approach was called for.” 

Brooke Pendlebury
Wednesday, February 12, 2014