08 Aug Notice of Termination and Reasonable Notice
Employers must give employees a minimum amount of notice before terminating them. This obligation arises from the Fair Work Act 2009 (Cth) (Act).
In another context, a business may need to provide reasonable notice to terminate a commercial contract. This is an obligation that has developed at common law.
Interestingly, there are important differences between notice under the Act and reasonable notice at common law. Although, until recently, their interaction in the employment context has been unclear.
Notice of Termination under the Fair Work Act
Section 117 of the Act provides an employee cannot terminate an employee without written notice of the day of termination. Employers cannot terminate before the day the notice was given.
There are minimum periods of notice an employee must receive which are proportionate to the employee’s period of continuous service. These minimum periods range from 1 to 4 weeks. Employees over the age of 45 are to be provided an additional 1 week of notice if they have over 2 years’ continuous service.
Employers can pay employees in lieu of notice at the employee’s full rate of pay. Employers do not need to notify certain employee of termination, such as fixed-term employees, casual employees and employees terminated for serious misconduct.
You can find a simple explanation of notice of termination here.
Reasonable Notice at Common Law
Reasonable notice of termination is an implied contractual term that exists in contracts that do not include express terms for notice of termination. For example, many oral employment agreements will imply a term for reasonable notice if the parties have not previously discussed it.
What constitutes reasonable notice is at the discretion of decision-maker. Decision-makers may consider factors such as the nature of the job, availability of similar employment, employee’s age, length of service, and remuneration.
Recent developments
Until recently, employers and employees have been somewhat confused about which notice is required for employment contracts that do not include an express term for notice.
This because of the concepts of statutory supremacy and parliamentary sovereignty. These doctrines require that all laws enacted by the legislature take precedence over other law, including common law. The legislature has the ultimate legal authority to make, amend or repeal law, a power which exceeds those of the judiciary to make common law.
Employers have continued to allege that the introduction of the Act has abrogated the implied term for reasonable notice at common law. At the same time, employees have argued reasonable notice has not been clearly and unambiguously abrogated by the Act and remains in accordance with the principle of legality.
The decision in Cropper v Energy Action (Australia) Pty Ltd (No 2) [2025] FCA 663 was the first decision of a superior court to clear up the confusion. The Federal Court of Australia has finally reasoned that because the Act does not confer a right of termination it must exist elsewhere. If an employment agreement does not expressly state that right, the common law must imply it.
Conclusion
Reasonable notice still applies in employment circumstances. Employers should carefully review their employment agreements to ensure they include terms for notice of termination. Such terms can replicate those in the Act.
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