(b) then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.
97 Counsel for Rand referred to a number of authorities in support of his submission that the implication of the term for reasonable notice was unnecessary. The first was Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; (2016) 242 FCR 505. One of the issues in that case concerned the question of whether a term of reasonable notice could be implied into a contract and co-exist with a provision giving rights of termination on specified periods of notice. The Court held that it could not. Buchanan J (with whom McKerracher J and I agreed on this issue) said:
[216] 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.
[217] 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.
[218] 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.
98 Later, at [235]-[236], Buchanan J referred to the statements of principle in the majority and minority judgments in Byrne v Australian Airlines Ltd (1995) 185 CLR 410. The majority said at 422-3:
… 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 at 449-50 said:
[T]erms 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.
Buchanan J then continued:
[237] 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.
[238] 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.
99 It is to be observed, however, that in Westpac v Wittenberg, Buchanan J was speaking to a circumstance in which it had been accepted by the parties that the provisions in the employer's redundancy policy containing the periods of notice to be given on termination had been incorporated into the relevant employees' contracts of employment. It is also to be observed that, although the FW Act, including s 117, had come into operation before the terminations of the employment considered in Wittenberg, there was no suggestion that it operated independently of the matters identified by Buchanan J to preclude the implication of the term.
100 Next, Rand referred to the decision of the Full Court of the Supreme Court of South Australia in Brennan v Kangaroo Island Council [2013] SASCFC 151; (2013) 120 SASR 11. In that case, the Full Court held that an implied term for reasonable notice was not necessary because the industrial award which governed the plaintiff's employment specified the periods of notice which the employer "must give" in order to terminate the employment of employees. It is apparent that the Full Court's consideration was based on an understanding that the implied term as to reasonable notice was one of fact, and not of law, at [28], [34]. Nevertheless, its decision is consistent with earlier decisions concerning the effect of award provisions concerning notice, namely, Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 67 IR 162 at 188-9; Elliott v Kodak Australasia Pty Ltd [2001] FCA 807, (2001) 108 IR 23 at 38.
101 Next, counsel referred to two decisions of the District Court of South Australia which are more directly on point. In Kuczmarski v Ascot Administration Pty Ltd [2016] SADC 65; (2016) 259 IR 233, Auxiliary Judge Clayton upheld a submission that it was unnecessary to imply a term for termination on reasonable notice into the contract of employment of an award-free employee given the existence and operation of s 117. His Honour's reasons appear in the following passages:
[53] 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'.
[54] 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.
[55] 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.
[56] 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. There was no relevant 'gap to fill' in light of the operation of s 117 of the Fair Work Act.
[57] I accept those submissions.
(Footnotes omitted)
102 Auxiliary Judge Clayton also held that, if the common law did imply a term requiring reasonable notice into all contracts of employment unless excluded by express agreement or displaced by an award or statute, s 117 had the effect of displacing or excluding that term, at [58].
103 Her Honour Judge McIntyre held in Pappas v P&R Electrical Pty Ltd [2016] SADC 132 at [105] that a term as to reasonable notice was not required to give business efficacy to the plaintiff's contract of employment in that case because s 117 established his entitlement to notice.
104 As counsel for the Applicant pointed out, the approach adopted in Kuczmarski and Pappas, if correct, would mean that s 117 of the FW Act has had the effect of precluding the implication of the common law term for reasonable notice in all cases to which the FW Act applies. Given the decision in the Work Choices Case [2006] HCA 52; (2006) 229 CLR 1, this will mean that the common law term is excluded in the great majority of employment contracts in Australia in which there is no provision for notice and for which an award or enterprise agreement does not specify such a period. If that be so, it may be an unforeseen consequence of the enactment of s 117.
105 It is at least arguable that the decisions in Kuczmarski and Pappas have not had regard at all, or at least have not attached sufficient significance, to:
consideration of the effect of s 117 having regard to the manner of its expression and its role in stating a National Employment Standard. In this respect, the views expressed by Judge McNab in McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227; (2016) 313 FLR 370 at [85] may be pertinent:
[85] I think the better view [than that expressed in Kuczmarski] is that s.117 is in that part of the Act dealing with National Employment Standards and is intended to provide a minimum period only. It does not displace a right to reasonable notice when the contract of employment is silent on the question of notice. By paying or giving the minimum period of notice under s.117(2), the employer will have satisfied the National Employment Standard and not be liable for a claim of breach of those standards. However, it is strongly arguable that payment or provision of that notice will not necessarily satisfy a claim for reasonable notice. The proposition may be tested where the employment of two employees is terminated. Both are over 45 years of age. One has worked for 5 years in a mid-range role, the other has worked for 25 years and worked her or his way up on a high level role. Both are employed under contracts that make no provision for notice of termination. I doubt that parliament intended that both would receive the same period of notice of termination by the enactment of s.117(2) of the Act.
related to this is that the implied term has a dual aspect: conferring the right to terminate the employment contract but making it subject to the provision of notice. In contrast, s 117 does not in terms grant a right, but prohibits the exercise of an express or implicit right found elsewhere unless the minimum stipulated notice is given: Macken's Law of Employment (8th ed, Lawbook, 2016), at 371; Gabrielle Golding, Terms Implied by Law into Employment Contracts: Rethinking their Rationale, (PhD Thesis, University of Adelaide, 2017), at 95-6;
the reference by French CJ, Bell and Keane JJ in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 at [30] to the implied term for reasonable notice, without any suggestion that it had been effectively supplanted by s 117: see Golding (2017), at 85;
the presumption against regarding a statute as modifying or abolishing common law rights unless that is clearly intended: Bropho v State of Western Australia (1990) 171 CLR 1 at 18;
the circumstance that the prohibition imposed by s 117 is unilateral, whereas the common law implied term usually involves reciprocal rights and obligations (cf Macauslane v Fisher & Paykel Finance Pty Ltd [2002] QCA 282; (2002) 1 Qd R 503 at [16]-[21]) even though the period of notice which is reasonable in order to exercise the right of termination it grants may vary according to whether it is the employer or employee who is to give the notice;
by imposing only a minimum obligation, s 117 does not on its face preclude a term requiring greater notice: Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284, at 289; and
the circumstance that s 117 is of general application, applying to employments of very different kinds and in diverse circumstances (see Guthrie v News Ltd [2010] VSC 196; (2010) 27 VR 196, at [197] (Kaye J)). In that respect it differs from most awards and enterprise agreements which are drafted with circumstances of particular industries and employments in mind. That is to say, awards and enterprise agreements are, to an extent, tailor made for the industries to which they apply. Section 117, being of general application, is not of that character. Account may have to be taken of this because notions of necessity usually involve, or at the least are underpinned by, factual considerations. This may make it inappropriate to reason in an a priori way that the fact that s 117 contains provisions concerning notice is sufficient, by itself, to indicate that there is no basis for the implication of the common law term. There may be cases in which it will be apparent that the rights of the parties under the contract of employment will, despite the effect of s 117, be rendered nugatory or seriously undermined without the implication of a term requiring reasonable notice for a termination.
106 Despite the potential importance of the issue, I consider it undesirable for the Court presently to express any concluded view. That should be deferred until it is necessary for the issue to be determined.