The NSW Supreme Court has awarded over $1 million to an employee who was dismissed without reasonable notice.
Susanna Ma worked as an accounts manager for businesses related to logistics company Expeditors International for 24 years.
Ma was 49 years old when she was dismissed and had an accounting team of more than 12 people reporting to her.
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She claimed Expeditors International breached her employment contract by failing to give her reasonable notice before terminating her contract.
Ma argued a reasonable notice period was 12 months at an income of $62,511 a month, which was the average monthly gross amount, including bonuses, Ma was paid. (See table at end of story.)
But Expeditors International only offered five weeks pay in lieu of notice giving her a total payout of $50,000.
Her gross average annual income over five years was calculated at $750,132, or $62,511 per month.
Acting Justice Nicholas found what was reasonable notice was to be determined after consideration of all the relevant circumstances of the case.
Length of service and seniority were two important factors.
The court also considered whether superannuation contributions were to be included in Ma’s ordinary pay.
The court found the proper period of notice was 10 months and Ma was entitled to payment at her final salary rate.
It also awarded the payment of a pro rata bonus of $8,138 and payment of the balance payable for long service leave in the amount of $265,373.
Andrew Douglas of M&K Lawyers told SmartCompany there was an “inevitability” given Ma’s seniority and experience that the court would determine 10 months was a reasonable notice period.
“The reality is that if you don’t specify your notice period in a contract you are left with reasonable notice as a matter of law,” he says.
Douglas says what is reasonable is based on length of time, seniority and longevity.
“There are key clauses in every employment contract which you must have,” he says.
These include a notice period, whether you can require someone to stay at home once their contract is terminated on “gardening leave”, how remuneration is actually calculated, a continuity of employment clause and a clause specifying that the contract is the sole instrument governing the employment relationship.
“SMEs must also identify the nature of the job that is being done accurately so they can manage people’s performance,” Douglas says.
He says most contracts in small business don’t include any description of the job the employee is doing.
“The problem with small business is they don’t have proper contracts so they are always chasing their tail with injured or poorly performing workers.”
SmartCompany contacted Expeditors International but did not receive a response prior to publication.
Ma’s earnings as laid out in the court ruling:
22. The plaintiff’s PAYG payment summaries identified total amounts paid to the plaintiff for each immediately preceding financial year. Those amounts for the years ending 30 June 2006 to 30 June 2011 (inclusive) are set out as follows:
|Year Ending||Gross payments||Total allowances|
|30 June 2006||$540,349||$20,196|
|30 June 2007||$622,702||$20,196|
|30 June 2008||$754,425||$20,566|
|30 June 2009||$943,574||$20,640|
|30 June 2010||$671,896||$20,640|
30 June 2011
(plaintiff’s employment terminated on 6 June 2011)
(including termination payments)