Written Employment Contracts may sound like a boring part of HR and business.
When it comes to employment relationships, unclear or incomplete contracts are a recipe for disputes. Courts are increasingly willing to step in where contracts are silent, and the results can be expensive for employers.
Two cases, one from New South Wales Daigle v SCT Operations [2022] NSWDC 364 and one from Queensland Connolly v Queensland Rugby Union Ltd [2017] QDC 221, demonstrate the high risks of failing to put in place clear, written, properly drafted and properly executed contracts.
Case 1: Daigle v SCT Operations [2022] NSWDC 364
The Facts
Mr Daigle, an engineer employed for more than 15 years, participated in a performance bonus scheme. After exceeding his targets in 2018–2019, he was entitled to a significant bonus paid in four instalments. Three instalments were paid, but SCT withheld the final payment after he failed to meet targets the following year due to illness.
When he challenged this, SCT made him redundant and paid 12 weeks’ redundancy pay and five (5) weeks’ notice under section 117 of the Fair Work Act. His written contract contained no clause specifying notice of termination.
Mr Daigle decided not to proceed with a General Protections Application but instead pursued a breach of contract claim.
Why the Missing Notice Clause Was Critical
The contract of employment amongst other things was missing a termination notice clause.
Because the contract was silent, the Court implied a common law entitlement to reasonable notice. At common law, reasonable notice depends on numerous factors such as:
- length of service
- seniority and responsibilities
- age and skills of the employee
- availability of alternative employment
In contrast, SCT attempted to argue that the five (5) weeks notice under the Fair Work Act was sufficient.
Instead, given Mr Daigle’s long service, specialist role, and limited re-employment prospects, the Court decided reasonable notice should be read into the contract and that eight (8) months’ notice was appropriate.
This was far more than the five weeks SCT thought sufficient under the Fair Work Act.
Further, the Court also awarded the unpaid bonus instalment finding that any changes to contractual bonuses can only be done so with both parties agreeing to this change.
The Award
The Court ordered:
- $94,452 for the unpaid bonus instalment
- $63,782.50 in lieu of reasonable notice
- less deductions, leaving a total of $132,555.58 including interest
The Lesson for HR
This case shows that statutory minimums provide only a floor. They do not displace the common law if a contract is silent.
Without an express notice clause, employers risk the Court imposing a much longer notice period. Bonus arrangements also need to be clearly defined. If the scheme operates in practice as contractual, it will be enforceable.
Case 2: Connolly v Queensland Rugby Union Ltd [2017] QDC 221
The Facts
John “Knuckles” Connolly, former Wallabies coach, was approached to assist rugby team the Queensland Reds during a crisis. His consultancy was agreed in a 90-second phone call while he was shopping. He said he was offered $3,000 per week until the end of the 2016 season.
Over the following weeks, draft employment and contractor agreements circulated. Many people normally involved in the signing of agreements were away on leave over various times. It was, in practical terms, easily missed. Some were signed by Connolly but not by the QRU, and many included disputed termination clauses. None were finalised.
Connolly worked for six (6) weeks before his role was terminated. The QRU relied on clauses in the draft contracts. Connolly argued the only binding agreement was the original phone conversation.
The Court’s Decision
The Court accepted Connolly’s version. The phone call created a binding deal with no termination clause. The QRU had unlawfully repudiated the agreement by ending it early.
The Court awarded him damages of more than $150,000, representing the balance of his weekly consultancy fees.
The Lesson for HR
Courts will enforce informal agreements if formal contracts are incomplete or improperly executed. Drafts and unsigned documents provide no protection. Where contracts are unclear, employers risk being bound by handshake deals or oral promises.
Why These Cases Matter for HR
Both cases show how courts address gaps in contracts:
- In Daigle, silence on notice led to an eight-month notice period, not five weeks.
- In Connolly, unsigned and inconsistent paperwork left the employer stuck with a verbal deal.
The clear message is that if your contracts do not specify terms, the courts may imply them, and the outcome is rarely in the employer’s favour.
Best Practice for HR
To avoid costly mistakes:
- Always include an express notice clause that states exactly how much notice will be given or paid.
- Clearly define bonuses and incentives. If they are discretionary, make that explicit in the contract and reflect it in practice.
- Ensure contracts are signed by both sides. Drafts and unsigned templates may have enforceability issues.
- Review older contracts. Long-serving staff may be working under outdated or incomplete terms.
- Document agreements properly. Do not rely on memory, phone calls, or handshake deals.
Going Forward
These cases underline that contracts are the foundation of the employment relationship. Poor drafting, missing clauses, or reliance on informal promises can cost employers hundreds of thousands of dollars.
The solution is simple: make sure contracts are written, properly drafted, properly executed, clear, complete, and regularly reviewed.
