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[2002] QCA 282
respondent. Leave to appeal granted; appeal dismissed; cross-appeal allowed; judgment below set aside and judgment entered for the respondent for $51,503.58. The appellant must pay the respondent’s trial...
The Court of Appeal upheld the nine-month notice period awarded to a senior employee whose employment was terminated. It said reasonable notice is a contextual judgment with a range of acceptable outcomes, and that an employee's own notice obligation does not automatically set the employer's obligation. The employee's lost superannuation contributions were added to damages, but accrued annual leave and leave loading were not added. The formal order gives judgment for $51,503.58, although the reasons calculate a total of $51,303.58.
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2,063 words · generated 02/10/2026
The appeal concerned the termination of David Macauslane’s employment as financial controller for Fisher & Paykel Finance Pty Ltd. The judgment provided here has no numbered paragraphs, so references below identify the relevant parts of the reasons by subject rather than supplying paragraph numbers.
Macauslane was offered the position on 24 November 1997, to begin work in January 1998. His appointment letter described the employment as intended to be “for the long term”. His salary began at $90,000 per year and had risen to $100,000 by 1 July 1999. He also had a company vehicle. He was responsible for financial control of the Australian finance division and was effectively second in charge to its general manager.
Macauslane was 34 when employed and 36 when his employment ended. He had economics and applied finance degrees and had held relatively senior financial and accounting roles. He moved from Sydney to Brisbane with his wife and three young children, purchasing a house there.
In March 2000, the company advised that its business would be wound up over the next three months. Macauslane was told on 7 March that his role would become redundant on 4 April. He received one month’s salary in lieu of notice to that date. At trial, the judge awarded damages that included nine months’ salary in lieu of notice. Fisher & Paykel Finance appealed, arguing nine months was too long. Macauslane cross-appealed aspects of the damages calculation, including the exclusion of superannuation and deductions involving salary and annual leave.
The Court of Appeal granted leave to appeal, dismissed the appeal, and allowed the cross-appeal. It added $1,923.08, which the employer accepted had been wrongly deducted, and $5,250 for lost superannuation contributions. It did not add a further amount for annual leave or leave loading.
There is an arithmetic discrepancy in the supplied judgment. The reasons say the revised award was $45,806.77 plus $5,496.81 interest, totalling $51,303.58. The formal orders instead enter judgment for $51,503.58. The judgment does not explain the $200 difference.
The central appeal issue was whether reasonable notice could be treated as a question of fact with a single correct answer, or whether it involved evaluative judgment attracting appellate restraint. Holmes J considered the process closer to an assessment using a general standard and several relevant circumstances. She drew on the approach in Norbis v Norbis, where the High Court described an assessment under a general standard as involving value judgments for which more than one reasonable opinion may exist.
White J agreed that determining reasonable notice involved discretion. He noted that the cases contain lists of relevant considerations, but that some factors may matter more than others in a particular case. His Honour considered the length and intended duration of employment, seniority, salary and conditions, age and job mobility among the significant considerations in this case.
The Court did not say that nine months was the only reasonable outcome. White J said he might have inclined towards six months. The point was that the trial judge’s nine-month conclusion was still within the range of reasonable outcomes and no error of principle had been shown. The appeal was therefore not a chance for the appellate judges simply to substitute their preferred period.
The Court also rejected the argument that a one-month notice obligation imposed on Macauslane should automatically govern the employer’s obligation. The appointment letter stated a notice period for the employee, but made no corresponding provision for notice by the employer. Holmes J reasoned that the needs of an employer replacing an employee and an employee seeking another role may differ significantly. There is no necessary equality between those needs. Reciprocity could matter in some cases, such as where both parties had considered notice, but it was not a presumptive rule that decided this case.
On the financial circumstances argument, the Court avoided a broad ruling. The employer relied on Canadian and New Zealand authorities, but Holmes J noted that no Australian authority had been identified to support the proposition that the employer’s finances should be taken into account. More importantly, financial circumstances had not been raised as an issue in the pleadings or at trial, and the evidence was limited. The Court declined to draw a conclusion from that material on appeal.
The superannuation cross-appeal succeeded because the employer’s contribution was treated as an obligation, not merely an optional additional benefit. Holmes J said that, on any view, the employer had assumed a statutory obligation to make superannuation contributions upon entering the employment relationship. The loss of contributions over the notice period followed directly from the failure to give the required notice. Applying Robinson v Harman, the damages should reflect the situation that would have existed if the contract had been performed.
The annual leave claim failed for a different reason. The employer could have required Macauslane to use accrued leave during the notice period. On that basis, the leave payment did not represent a separate benefit lost in addition to the notice damages. Leave loading also failed because the employment contract contained no provision for it.
The judgment did not announce a new statutory scheme for calculating notice or replace an existing formula with a fixed one. It dealt with the common-law assessment of reasonable notice where the employment letter did not specify an employer notice period.
Before this decision, the authorities discussed in the judgment already identified circumstances relevant to reasonable notice. Those included the nature and seniority of the work, salary, age, qualifications and experience, length of service, job mobility, and what an employee gave up to take the position. The judgment applied those considerations to a senior employee recruited for employment described as long term, while also recognising his relative youth, qualifications and previous mobility.
The decision’s contribution is its explanation of how those factors operate on appeal. The assessment is not a mechanical calculation, and the existence of another plausible period does not itself show error. A trial judge’s selection can stand where it falls within a reasonable range and the appellant does not demonstrate a relevant error of principle.
The decision also clarified the limited role of reciprocity in this setting. A notice term for the employee does not automatically set the period owed by the employer. The judgment leaves room for reciprocal terms or conduct to be relevant in a particular case, especially where both sides have addressed the subject, but rejects reciprocity as a general presumption that resolves the assessment.
On damages, the judgment treated employer superannuation contributions as a loss that could be recovered where the contributions would have been made during the notice period and their loss resulted directly from breach. It distinguished this from benefits discussed in NSW Cancer Council v Safarty, where the judgment noted that certain motor vehicle, journal subscription and travel benefits did not give rise to damages. The source does not set out a comprehensive test for every employment benefit; it applies the compensatory principle to the superannuation contribution before it.
The judgment is unnumbered. The following passages are quoted from the reasons as supplied.
“ ‘Reasonable’ is a relative term.”
White J’s short observation explains why reasonable notice is not a fixed number applying to every employee. The proper period depends on the circumstances and may admit of different defensible answers.
“There is no necessary and neat equation between the needs of employee and employer for notice…”
Holmes J’s point is that an employee’s time to find another job and an employer’s time to replace an employee are not automatically equivalent. A notice period imposed on one party therefore does not, by itself, establish what is reasonable for the other.
“It is to enable the employee to obtain new employment of a similar nature.”
Holmes J quoted this proposition from Rankin v Marine Power International. It explains why matters such as seniority and availability of comparable work can be relevant to the employee’s notice period. The judgment also stresses that the period is fixed as at the time notice is given, rather than by simply looking backwards at how quickly this employee later found work.
“The respondent is entitled ‘to be placed in the same situation, with respect to damages, as if the contract had been performed.’”
This statement from Robinson v Harman supplied the damages principle. Applied here, it supported adding the value of superannuation contributions that would have been made during the notice period.
The decision is most directly relevant to employment disputes where the contract does not specify the employer’s termination notice period and a court must assess what notice is reasonable. Its factual setting involved a senior financial executive, a letter describing employment as intended to be long term, a substantial salary, relatively short service, and termination following a proposed business closure.
It is also relevant where a party argues that a notice period specified for the employee must necessarily apply in reverse. The decision says that reciprocity is not an automatic rule. It may still be relevant where the parties have expressly considered notice periods or where the employee’s own required period is unusually long, but the circumstances have to be assessed rather than treated as determinative.
The damages reasoning may be relevant where an employer’s contributions or other employment benefits would have continued during the reasonable notice period and the claimed loss is said to result directly from breach. In this case the superannuation amount was quantified and undisputed. The judgment does not establish that every benefit supplied during employment is automatically recoverable.
The leave discussion is tied to the particular circumstances. The Court considered that the employer could have required the employee to take accrued leave during the notice period and found no contractual provision for leave loading. Different contractual wording or facts could raise different issues; the judgment does not address those variations.
The supplied judgment gives no information about later judicial treatment of Macauslane. It therefore does not establish whether later courts have followed, limited, distinguished or questioned the decision. No later cases can be responsibly identified from the source text alone.
The judgment itself explains its use of earlier authorities. It treats Norbis v Norbis as supporting the view that an assessment involving a general standard and value judgments may allow a range of reasonable conclusions. It relies on Brookton Holdings and Rankin in discussing the purpose and assessment of notice. It applies the compensatory principle in Robinson v Harman to superannuation loss. Other cited decisions, including Helbig, Edward Keller, Bohemier, Charta Packaging and Aoraki, are considered in addressing reciprocity or employer financial circumstances, with the Court distinguishing their relevance to the facts or context before it.
The Court expressly left unresolved whether an employer’s financial circumstances can be relevant to reasonable notice as a general proposition. It did not decide the issue because it had not been raised at trial and the evidence was limited. The judgment therefore should not be read as either a categorical acceptance or rejection of financial circumstances as a factor.
The decision also leaves open how much weight reciprocity may receive in a case where the parties expressly negotiate notice periods, or where an employee is required to give an unusually long period of notice. Holmes J identified circumstances in which reciprocity could be a factor, but did not set out a complete framework for weighing it.
The judgment does not specify a formula for the relative weight of age, seniority, mobility, service length, salary, or the employee’s relocation and other sacrifices. It explains that their significance varies with the case. Nor does it determine how later re-employment should be treated in all cases: Holmes J doubted it was an independent factor and said it might at most provide an indication of mobility.
Finally, the difference between the total stated in the reasons and the formal order remains unexplained in the supplied text. The reasons calculate $51,303.58, while the orders state $51,503.58. The source does not provide a correction or clarification.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have a qualified Australian lawyer check it.
Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Macauslane v Fisher & Paykel Finance P/L [2002] QCA 282
PARTIES: DAVID MACAUSLANE (plaintiff/respondent) v FISHER & PAYKEL FINANCE PTY LTD ACN 074 265 197 (defendant/appellant)
FILE NO/S: Appeal No 9513 of 2001 / DC No 1973 of 2000
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: District Court at Brisbane
DELIVERED ON: 9 August 2002
DELIVERED AT: Brisbane
HEARING DATE: 6 June 2002
JUDGES: McMurdo P, White and Holmes JJ / Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDER: **1.**Application for leave to appeal granted / 2.Appeal dismissed / 3.Cross-appeal allowed / 4.Judgment below set aside and in lieu thereof judgment be entered for the respondent in the amount of $51,503.58 / **5.**Appellant to pay the respondent’s costs of the trial on an indemnity basis to be assessed, and the respondent’s costs of the application for leave, of the appeal, and of the cross-appeal to be assessed on a standard basis
CATCHWORDS: EMPLOYMENT LAW – THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE – DURATION AND TERMINATION OF EMPLOYMENT – TERMINABLE ON REASONABLE NOTICE – where respondent, whose employment with the appellant was terminated, was awarded damages in lieu of nine months notice of termination – whether determining period of reasonable notice was an exercise of discretion or a question of fact / EMPLOYMENT LAW – THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE – DURATION AND TERMINATION OF EMPLOYMENT – TERMINABLE ON REASONABLE NOTICE – where letter of employment failed to stipulate period of notice to be given to respondent upon termination of contract of employment – whether what is reasonable should be determined by application of a presumption or reciprocity – whether the period of notice specified as required from employee should equally be regarded as appropriate upon termination by the employer / EMPLOYMENT LAW – THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE – DURATION AND TERMINATION OF EMPLOYMENT – TERMINABLE ON REASONABLE NOTICE – whether financial circumstances of the employer should be taken into account when determining what constitutes reasonable notice / EMPLOYMENT LAW – THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE – REMUNERATION – MATTERS AFFECTING RIGHT – TERMINATION OF CONTRACT – whether damages award should have included the value of the contribution the appellant would have made to the respondent’s superannuation over the period of notice – whether, upon entry of the contract of employment, the appellant assumed a legal obligation imposed by the statute to pay superannuation – whether respondent’s loss of that benefit for the period of notice arises directly from the appellant’s breach of contract in failing to give the required notice / EMPLOYMENT LAW – THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE – REMUNERATION – MATTERS AFFECTING RIGHT – TERMINATION OF CONTRACT – where no contractual provision for leave loading – whether offsetting allowance for payments made by the appellant to the respondent, including the respondent’s accrued entitlement to annual leave, should have been made / District Court Act 1967 (Qld), s 118(3) / Uniform Civil Procedure Rules r 361 / Aoraki Corporation Ltd v McGavin [1998] 3 NZLR 276, considered / Bohemier v Storwall International Inc (1983) 40 OR (2d) 264, considered / Brookton Holdings Pty Ltd (No. V) v Kara Kar Holdings Pty Ltd (1994) 57 IR 288, applied / Charta Packaging Limited v Howard & Ors (2000) 6 NZELC 75-517, considered / Colonial Sugar Refining Company Limited v Irvint [1905] AC 369, considered / Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 54, considered / Edward Keller (Australia) Pty Ltd v Hennelly (1990) 35 IR 464, considered / Helbig v Oxford Warehousing Ltd (1985) 51 OR (2nd) 421, considered / House v The King (1936) 55 CLR 499, considered / Irons v Merchant Capital Ltd (1994) 116 FLR 204, considered / McClelland v Northern Ireland General Health Services Board [1957] 2 All ER 129, followed / Norbis v Norbis (1986) 161 CLR 513, followed / NSW Cancer Council v Safarty (1992) 28 NSWLR 68, considered / Opera House Investment Pty Ltd v Devon Buildings Pty Ltd / (1936) 55 CLR 110, applied / Quinn v Jack Chia (Australia) Limited (1972) 43 IR 91, considered / Rankin v Marine Power International (2000) 107 IR 117, applied / Robinson v Harman (1848) 1 Ex. 850, applied / Sunskill Investments Pty Ltd v Townsville Services Pty Ltd [1991] 2 Qd R 210, considered / Thorpe v South Australian National Football League (1974) 10 SASR 17, considered
COUNSEL: K Watson for the appellant / J Douglas QC, with C W Smiley, for the respondent
SOLICITORS: Freehills for the appellant / Macrossans Lawyers for the respondent
MCMURDO P: I agree with the orders proposed by Holmes J and with her reasons.
WHITE J: I have read the reasons for judgment of Holmes J and agree with them.
I agree with her Honour that deciding what constitutes reasonable notice of termination of employment is a question for the exercise of a discretion. As Starke J noted in Opera House Investment Pty Ltd v Devon Buildings Pty Ltd1 “"Reasonable" is a relative term”.
The cases and or authorities are replete with “lists” of key considerations from which the court will make the decision. The cases clearly reveal some factors will assume greater significance than others. In selecting and weighing the various circumstances in a wrongful dismissal case a judge is required to do so judicially and a decision arrived at may only be disturbed on appeal by the application of well established principles.2
The question of what constituted reasonable notice here required an appreciation of the intended duration of the employment at its commencement, the seniority of the position, the salary and conditions, the age and mobility of the employee to name the most significant. Minds might well differ and reasonably so as to whether three, six or nine months was reasonable notice. For my own part I might have inclined towards six months but there is nothing to suggest that in selecting nine months on the facts before her, her Honour fell into error.
I agree with the orders proposed by Holmes J.
HOLMES J: The appellant company was, at first instance, defendant to the respondent’s claim for damages for wrongful termination of employment. The respondent obtained judgment (after certain amendments under the slip rule) amounting to $43,269.73. A component of the damages was an amount of $75,000 (before various deductions were made), representing nine months salary in lieu of notice. The appeal was based on the contention that, in the circumstances, nine months was too long a period to constitute reasonable notice.
The cross-appeal
The respondent brought a cross-appeal against the trial judge’s finding that superannuation did not form part of the salary package to which he was entitled, and against her calculation of damages. Essentially, the respondent contended that the learned trial judge was wrong in deducting from the damages certain payments made by the appellant: $1,923.08, representing salary paid for the last period of his employment prior to termination; $4,358.81, being annual leave payments owing as at 7 March 2000; and loading on leave of $762.79. The appellant accepted that the salary component of $1,923.08 had been wrongly deducted from the damages, but resisted the cross-appeal so far as the other amounts were concerned.
Leave to appeal
The judgment as originally delivered awarded $44,965.98 in damages together with interest of $5,300.96, bringing the total above $50,000, or the Magistrates Court’s jurisdictional limit. Thus the appellant had an appeal as of right, under s 118(2)(a)(i) of the District Court Act 1967, from the judgment in that form. However, the amendments subsequently made to the judgment brought the total well below that limit; and the respondent therefore argues that the appellant requires leave to appeal under s 118(3). Mr Watson for the appellant advanced an argument that the judgment in its original form had given a substantive right to appeal which could not be taken away by subsequent amendments. He relied on statements as to the effect of vested rights in Colonial Sugar Refining Company Limited v Irving3 and Sunskill Investments Pty Ltd v Townsville Services Pty Ltd.4
I must say that I have some difficulty in equating the purported removal by subsequent legislation of vested rights of appeal with the correction, under the slip rule, of amounts awarded by a judgment. I would suspect that, at best, any accrued right of appeal in this case exists only against the judgment in its earlier form, as originally delivered; a right which, since that judgment no longer has effect, is to all intents nugatory. But the appellant undertook to file an application for leave to appeal. Having heard the argument I would grant leave to appeal, since the matter raises questions of law of some significance.
The employment of the respondent
The respondent was offered the position of financial controller with the appellant on 24 November 1997, to commence work in January 1998. His letter of appointment expressed an intention that his employment with the appellant would be “for the long term”. His starting salary was $90,000 per annum. This had increased to $100,000 per annum as at 1 July 1999. He was also provided with a company vehicle. In his position with the appellant, he undertook financial control for its Australian finance division and was effectively second in charge to the general manager.
The respondent was 34 years of age at the time he was employed, and 36 when his employment ceased. His formal qualifications were a bachelor of economics degree and a master’s degree in applied finance from Macquarie University. At the time he took the position he was a resident of Sydney, and had been employed for some three years as commercial services manager with CSR Treasury Limited. He had previously held relatively senior financial and accounting roles. Upon obtaining the position with the appellant he purchased a house in Brisbane and moved his family (his wife and three young children) to Brisbane.
The cessation of employment
The group structure of the Fisher & Paykel companies is set out in a diagram which was part of an agreed bundle of documents. It shows that the appellant company is owned by Fisher & Paykel Industries Limited. Financial statements for that company for the year ended 31 March 1997 (the company is, apparently, registered in New Zealand, hence the different financial year) show the parent company to be in a sound financial position, at least at that time. But it appears from other documents, although without descent into detail, that the performance of the appellant as at the beginning of 2000 was perceived as unsatisfactory, particularly compared with the successful operation of its New Zealand equivalent. On 6 March 2000 the respondent was advised that the business of the appellant would be wound up over the ensuing three months. On 7 March 2000 (after some discussions the preceding day) he was advised that his position would be redundant as of 4 April 2000. He was paid one month’s salary in lieu of notice to that date.
Was determining reasonable notice an exercise of discretion?
Mr Watson argued that what constituted a reasonable period of notice was a question of fact which permitted only one answer, rather than a question of discretion requiring the application of House v The King5 principles. I have considerable difficulty in accepting that the determination of what is reasonable can be reduced to a calculation admitting of only one correct answer. It seems to me that the exercise is more akin to that which was the subject of appeal in Norbis v Norbis.**6 The trial judge in the Family Court in that case had to determine what was “just and equitable”, taking into account factors prescribed by statute, for the purpose of making an order as to property interests. In the judgment of Mason and Deane JJ in the High Court the order was described as
“discretionary because it depends on the application of a very general standard – what is “just and equitable” – which calls for an overall assessment in the light of the [relevant statutory] factors … each of which in turn calls for an assessment of circumstances. Because these assessments call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, the making of the order involves the exercise of a judicial discretion.
The contrast is with an order, the making of which is dictated by the application of a fixed rule as to the facts on which its operation depends.”
In my view, the process of assessing the various factors – age, seniority, job mobility and so on - relevant to arriving at a conclusion as to what is reasonable, is closer to the first exercise described by their Honours than the second.
Whether one characterises the process undertaken by the trial judge as exercise of discretion or fact-finding, one concludes, inevitably, that there is not a unique correct answer, and that what is reasonable must cover a range of possibilities. A view taken in this court that a finding as to the length of the relevant period, while within the range of what was reasonable, fell toward the side of generosity or, for that matter, of frugality, should not of itself lead to interference with the award:
“If the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance.”7
Is reciprocity the determinant of what constitutes reasonable notice?
The letter of appointment, which constituted the contract of employment between the appellant and respondent, made no reference to notice to be given to the respondent. The learned trial judge implied a term requiring reasonable notice, and that conclusion was not challenged on appeal. However, the letter of appointment did prescribe a minimum of one month’s notice to be given by the respondent to the appellant should he choose to leave the latter’s employment. Mr Watson, for the appellant, argued that what was reasonable should be determined by application of a presumption of reciprocity; that is to say, that the period of notice specified as required from the employee should equally be regarded as appropriate upon termination by the employer. He pointed to a reference in Freedland The Contract of Employment to
“the pattern of reciprocity which seems to run throughout the common law concerning notice; that is to say the presumption that each party is bound to give notice of the same length as that which he is entitled to receive”.
He relied also on the statement of the Court of Appeal of Ontario in Helbig v Oxford Warehousing Ltd:8
“He [the employee] had made it clear that he regarded one year as being sufficient notice of termination on his part in the event that he should wish to leave the company’s service. He has clearly put a cap on the amount of severance that he should receive because there is no reason in this case why he should expect a lengthier notice from the company than he was prepared to give it.”
On this reasoning, the court in Helbig concluded that the employee was entitled to 12 months notice, rather than the 18 months notice found by the trial judge.
By way of Australian authority on the point, Mr Watson referred to the decision of the New South Wales Court of Appeal in Edward Keller (Australia) Pty Ltd v Hennelly.9 In that case, the letter of appointment had prescribed a period of notice to be given by the employee of three months. At a later meeting, a record was made that notice of one month was to be given by both employer and employee. Meagher JA, with whom the other members of the Court agreed, observed in respect of those pieces of evidence:
“It is incontrovertible that whenever the parties discussed termination of employment they did so in terms of either one month’s notice or three month’s notice being required. In my view the court should not impose on the parties in excess of what either of them considered reasonable with when they turned their minds to that topic.”
In the result the court concluded that three months was the reasonable period required.
Nothing referred to by Mr Watson convinces me that there is any underlying pattern of reciprocity so far as notice in Australian employment law is concerned. The passage cited from Freedland appears more generally directed; it cites no authority for application of such a presumption to employment cases. And there was no reference by the court in Edward Keller to reliance on reciprocity as a guiding principle.
Mr Watson criticised the reliance by the trial judge in the present case on this passage from the opinion of Lord Evershed in McClelland v Northern Ireland General Health Services Board:10
“And the argument on reciprocity seems to me, with all respect to those who have taken a different view, to beg the very question which we have to decide. As a matter of practical common sense, the situation of the employer board and that of one of its servants are very different. The loss or damage to the board occasioned by the departure of one of its servants would save in very exceptional circumstances be negligible. To a servant, certainly a servant in the position of the appellant, the security of employment with the board for the period of working life is of immense value.”
While it is true that his Lordship’s observations were made in a different context, they nonetheless identify a fundamental objection to applying the notion of reciprocity to notice in the employment sphere: that the position of an employer needing to hire a replacement may be very different from that of an employee seeking alternative employment. Indeed, where the employee possesses a scarce skill and opportunities of employment are plentiful, it might even be that the position is reversed: that longer notice is required of the employee. The point is that there is no necessary and neat equation between the needs of employee and employer for notice such as would lead to an inevitable conclusion that what is reasonable for one is reasonable for the other. Thus her Honour was correct, in my view, in referring to the speech of Lord Evershed as pointing out “the flaw in the argument as to reciprocity”.
At the highest, the notion of reciprocity may constitute a factor to be taken into account in determining what is reasonable notice. That may be so where, as in Helbig, a very substantial period of notice is required from the employee, with a correspondingly lengthy requirement being attributed to the employer. And again, different considerations may apply where both employer and employee have turned their mind to the question of reasonable notice to be given by each, as was the case in Edward Keller. But in the circumstances of the present case, I consider that the learned trial judge was correct firstly, in declining to imply into the contract any requirement of reciprocity, and secondly, in determining reasonable notice by reference to other factors.
The employer’s financial circumstances
Mr Watson also argued that nine months was too long a period of notice, independent of any notion of reciprocity. In particular, he submitted that the learned trial judge ought to have taken into account the financial circumstances of the employer. For this proposition he relied on another Canadian decision, Bohemier v Storwall International Inc.11 The judge at first instance in that case took into account the employer’s circumstances:
“There is a need to preserve the ability of an employer to function in an unfavourable economic climate. He must if he finds it necessary be able to reduce his workforce at a reasonable cost.”12
An appeal against the decision was allowed,13but not on that point. On that aspect of the case the Court of Appeal expressed its agreement with the trial judge’s approach of taking into account economic factors applicable to both employer and employee.
After the hearing of the appeal, the solicitors for the appellant forwarded to the court a recent decision of the New Zealand Court of Appeal, Charta Packaging Limited v Howard & Ors.**14 In that case, the New Zealand Court of Appeal was considering the appropriate period of notice for some employees made redundant, as well as compensation pursuant to the Employment Contracts Act 1991 (NZ). The court referred to its earlier decision in Aoraki Corporation Ltd v McGavin15 in taking as its starting point the proposition that:
“Common practice in employment agreements in relation to a required notice of redundancy … provided no support for a reasonable notice period much in excess of one month”.
That conclusion as derived in Aoraki was, however, based on surveys of collective employment contracts in New Zealand in the 1990’s, and is not, therefore, of assistance here. The court in Charta Packaging did go on however, to discuss factors relevant “in deciding whether the circumstances justify notice beyond prevailing practices”, which included, it said, the financial circumstances of the company.16
Mr Watson was not able to point to any Australian authority for the proposition that the employer’s financial circumstances ought to be taken into account. In Brookton Holdings Pty Ltd (No. V) v Kara Kar Holdings Pty Ltd17 Young J sitting in the Equity Division of the New South Wales Supreme Court was unimpressed by a similar argument:
“There was no agreement between the parties as to how long the contract would inure and, accordingly, it was a contract which was terminable by reasonable notice. Mr De Meyrick put that reasonable notice in this context means reasonable both to the employer and to the employee. I do not consider that is the right way of looking at the matter.
What is reasonable is what a reasonable observer would consider the employee would need in order to find a new position in the labour market, if the contract should come to an end. It is not a situation that the employer can either by accident or design have a company with too few liquid funds and say, accordingly, that it is reasonable for all the employees to leave without notice or with very little notice.”
The purpose of notice was similarly identified by Gillard J in Rankin v Marine Power International:18
“In determining what is a reasonable period in respect to an employee, it must be steadily borne in mind what the primary purpose of giving a period of notice is. It is to enable the employee to obtain new employment of a similar nature.
Some types of employment are readily available, whilst others are not. Those who are at the top or near the top of their chosen fields, invariably have very few opportunities to obtain similar employment and hence, the period of notice is usually many months to an excess of a year.”
Even were the employer’s financial circumstances to be regarded as relevant, there is, in my view, considerable force in the submission of Mr J Douglas QC, for the respondent, that questions of impecuniosity on the part of the appellant were not raised as an issue either in the pleadings or in argument at trial. It would not, in my view, be appropriate for this court now to attempt to draw some conclusion from the very little evidence that there was as to the appellant’s financial position, when to do so would be to proceed on a basis entirely different from that advanced at trial.
“Gardening leave”
Mr Watson also argued that in determining what was reasonable the court should also have regard to the potential for an extended period of notice to demoralise an employee for whom there was no work. While that approach suggests an admirable concern for the morale of the employee made redundant, it finds no support in Australian law, and does not, I think, sit well with the view that notice is to enable the employee to set about finding new employment.
The range of reasonable notice
Factors which have been identified in the authorities as relevant in determining what is a reasonable period of notice, and which have some application in the present case, are: the length of the term for which the employee is employed; the nature of the employment; the status, seniority and salary of the position; the employee’s age; the employee’s qualifications and experience; the employee’s length of service and degree of job mobility, and what the employee gave up to come to the present employer.19 Her Honour ought, Mr Watson submitted, to have regarded these considerations as shortening the reasonable period of notice: the relatively short service of the respondent with the appellant; his youth at the time of the termination of his employment; and his demonstrated mobility and employment in the past. He also argued that the fact that the respondent had been able to obtain alternative employment within a period of less than seven months should have been treated as an additional factor in determining notice. I doubt that that fact can constitute an independent factor to be taken into account, given that the period of reasonable notice must be determined as at the time when notice is given. It might at best provide some indication, though not in this case a particularly encouraging one, of the respondent’s mobility between employers.
The authorities referred to by the respondent20 seem to support a range for reasonable notice, in the case of a senior executive with a large corporation in anticipated long term employment, of between six and twelve months. Given the respondent’s youth and relative mobility I would have been inclined to the lower end of that range. However, no error of principle is demonstrated in the learned trial judge’s conclusion that nine months was the appropriate period, and it falls, in my view within the range of what might be found reasonable. I see no reason for interference with it. I would dismiss the appeal.
Cross -appeal
The first of the arguments for the respondent was that the damages award should have included the value of the contribution the appellant would have made to the respondent’s superannuation over the period of notice, the relevant contractual term being constituted by this passage in the letter of appointment:
“Superannuation
You will be offered the opportunity to become a member of our subsidised Superannuation Scheme. The full details of this scheme are enclosed and further information is available if necessary.”
The respondent’s further amended statement of claim pleaded the respondent’s membership of the appellant’s subsidised superannuation scheme as referred to in that clause and the making of contributions at seven percent of gross salary by the appellant. Her Honour found, however, that superannuation was not part of the salary package.
But the respondent’s entitlement to damages for the loss of superannuation benefits is not determined by deciding whether the reference to membership of the scheme in the letter of appointment amounted to an independent contractual entitlement or merely acknowledged the employer’s statutory obligation under the Superannuation Guarantee Charge Act 1992. On any view, upon entering the contract of employment the appellant assumed a legal obligation imposed by the statute to pay superannuation; the contributions made by it constituted the performance of that obligation, and were not merely some additional benefit conferred upon the respondent.21 The respondent’s loss of that benefit for the period of notice arises directly from the appellant’s breach of contract in failing to give the required notice. Applying the principle in Robinson v Harman, the respondent is entitled “to be placed in the same situation, with respect to damages, as if the contract had been performed.”22 His loss in this respect was quantified at $5,250, an amount not disputed by the appellant.
Annual leave and leave loading
Her Honour deducted from the award, and made no offsetting allowance for, payments made by the appellant to the respondent, including the respondent’s accrued entitlement to annual leave; hence the cross-appeal on this point. But as Mr Watson pointed out, correctly in my view, the appellant would have been within its rights to require the respondent to exhaust his leave entitlements as part of the nine month period of notice, so that they should not be regarded as constituting an additional benefit lost. For an instance where this approach appears to have been adopted, although without elaboration, I note that in Quinn v Jack Chia (Australia) Limited23 the trial judge deducted from the award amounts received from the employer during the notice period, including payment for leave. There was no suggestion that that amount then should be added back in to the award.
In my view, her Honour was correct in not allowing an additional amount to offset the deduction for annual leave. Nor was there any contractual provision for leave loading. There was therefore, no basis on which it could or should have been added to the award.
In the result, the cross-appeal should succeed to the extent of allowing the amount of $1,923.08 conceded by the appellant, and the loss of superannuation benefits quantified at $5,250. The judgment should be amended accordingly to require the appellant to pay the respondent the sum of $45,806.77 plus interest of $5,496.81, giving a total of $51,303.58. That figure is significantly above the offer made by the appellant, with the result that the respondent should, pursuant to UCPR r 361, have his costs of the trial on an indemnity basis.
Orders
I would grant the application for leave to appeal; dismiss the appeal; allow the cross-appeal; set aside the judgment and in its stead give judgment for the respondent in the amount of $51,503.58. The appellant should pay the respondent’s costs of the trial on an indemnity basis to be assessed, and the respondent’s costs of the application for leave, of the appeal, and of the cross-appeal to be assessed on a standard basis.
Footnotes
1 (1936) 55 CLR 110 at 117.
2 House v The King (1936) 55 CLR 499 at 505.
3 [1905] AC 369.
4 [1991] 2 Qd R 210.
5 (1936) 55 CLR 499.
6 (1986) 161 CLR 513.
7 Norbis v Norbis (1986) 161 CLR 513 at 518.
8 (1985) 51 OR (2d) 421 at 430.
9 (1990) 35 IR 464.
10 [1957] 2 All ER 129 at 142.
11 (1983) 40 OR (2d) 264.
12 (1983) 40 OR (2d) 264 at 268.
13 40 OR (2d) 361.
14 (2000) 6 NZELC 75-517.
15 [1998] 3 NZLR 276.
16 (2000) 6 NZELC 96, 586.
17 (1994) 57 IR 288.
18 (2000) 107 IR 117 at 138.
19 Macken, McCarry & Sapideen, The Law of Employment, 4th edition, p 166-168 provides a list, including, inter alia, these factors*,* referred to in Quinn v Jack Chia (Australia) Limited (1992) 43 IR 91 at p 103; Rankin v Marine Power International Pty Ltd (2001) 107 IR at p 138-139 and Irons v Merchant Capital Ltd (1994) 116 FLR 204 at 208-209.
20 Thorpe v South Australian National Football League (1974) 10 SASR 17; Quinn v Jack Chia (Australia) Limited (1972) 43 IR 91; Irons v Merchant Capital (1994) 116 FLR 204 and Rankin v Marine Power International Pty Ltd (2001) 107 IR 117.
21 As were the motor vehicle journal subscriptions and travel grants which did not give rise to any entitlement to damages in NSW Cancer Council v Safarty (1992) 28 NSWLR 68 at 78-79.
22 (1848) 1 Ex. 850 at 855; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 54 at 80, 98, 100, 134, 148.
23 (1992) 43 IR 91 at 104.
Macauslane
Fisher & Paykel Finance Pty Ltd [2002] QCA 282
(1994) 57 IR 288
(1991) 174 CLR 54
(1990) 35 IR 464
(1936) 55 CLR 499
(1994) 116 FLR 204
(1986) 161 CLR 513
(1992) 28 NSWLR 68
(1936) 55 CLR 110
(1972) 43 IR 91
(2000) 107 IR 117
(1974) 10 SASR 17
Leave to appeal granted; appeal dismissed; cross-appeal allowed; judgment below set aside and judgment entered for the respondent for $51,503.58. The appellant must pay the respondent’s trial costs on an indemnity basis and costs of the leave application, appeal and cross-appeal on a standard basis.
Macken, McCarry & Sapideen, The Law of Employment, 4th edition, p 166-168 provides a list, including, inter alia, these factors*,* referred to in Quinn v Jack Chia (Australia) Limited (1992) 43 IR 91 at p 103; Rankin v Marine Power International Pty Ltd (2001) 107 IR at p 138-139 and Irons v Merchant Capital Ltd (1994) 116 FLR 204 at 208-209. ↩ ↩2
Thorpe v South Australian National Football League (1974) 10 SASR 17; Quinn v Jack Chia (Australia) Limited (1972) 43 IR 91; Irons v Merchant Capital (1994) 116 FLR 204 and Rankin v Marine Power International Pty Ltd (2001) 107 IR 117. ↩ ↩2
As were the motor vehicle journal subscriptions and travel grants which did not give rise to any entitlement to damages in NSW Cancer Council v Safarty (1992) 28 NSWLR 68 at 78-79. ↩ ↩2