The Federal Court of Australia has delivered a timely reminder that reasonable notice is still in play. In the recent decision of Cropper v Energy Action (Australia) Pty Ltd (No 2) [2025] FCA 663 (Cropper Case) the Court confirmed that, in the absence of an express notice period in an employment contract, a term requiring reasonable notice of termination may still be implied.
When Does Reasonable Notice Arise?
Reasonable notice becomes an issue when an employee is terminated and:
- There is no written employment contract,
- The existing contract is silent on notice periods, or
- The employee contends the original contract has ceased to operate, often due to a major change in their role
In these situations, Australian Courts may imply a contractual term requiring the employer to give “reasonable notice” of termination.
What Counts as ‘Reasonable Notice’?
There is no one size fits all answer. The court will consider factors such as:
- The employee’s length of service;
- The employee’s age;
- The employee’s qualifications;
- The seniority of their role;
- The availability of comparable roles and their likelihood of securing re-employment.
In many cases, “reasonable” notice can extend beyond the statutory minimums there have been past cases where 3, 6 and even 12 months notice have been deemed appropriate. If this implied notice is not provided, the employee may seek damages equivalent to what they would have earned during that period (taking into account any wages they have earned during this time).
The Legal Debate: Does the Fair Work Act Override Reasonable Notice?
For a time, there was judicial hesitation about whether the existence of statutory notice periods—like those in section 117 of the Fair Work Act 2009 (Cth)—precludes the implication of reasonable notice. Several state court decisions held that where legislation or modern awards already prescribe minimum notice periods, it’s unnecessary (and impermissible) to imply a further term.
However, the Federal Court’s Cropper Case has now pushed back at this view.
What the Court Said in the Cropper Case
The issue in dispute related to whether the applicant, an IT specialist was an independent contractor or a permanent employee. The applicant’s remuneration at this time was somewhere in the vicinity of $130,000 a year.
The Federal Court found that although the relationship may have started as a contractor relationship it evolved into an employment relationship.
Some of the factors considered to come to this conclusion included:
- The applicant being integrated into the employee payroll program;
- Management responsibilities;
- Participation in performance reviews and appraisals.
It was found that accrued but untaken leave was payable.
Further, the Federal Court clarified that section 117 does not create a contractual right of termination — it merely restricts how and when that right can be exercised. It doesn’t prevent a court from implying a term of reasonable notice if the employment contract is otherwise silent.
In this particular case, the court awarded three (3) months’ notice (plus his accrued but untaken annual leave) to Mr Cropper, citing:
- His 14 years of service with the company (plus one year as a contractor),
- His professional qualifications,
- His senior position, and
- His age (nearing or at 70), making it unlikely he could secure new employment.
What HR Teams Should Take Away
- No contract of Employment except a successful reasonable notice claim: What is glaringly obvious is if you do not have a written employment contract in place you should expect a reasonable notice claim to be successful. An employment contract sets out the basic fundamentals, expectations and obligations of the employment relationship ensuring there is clarity around this should not be taken for granted.
- Review contracts carefully. Ensure that all employment contracts include express termination provisions, even for long-serving or senior staff. If there are old employment contracts that do not have notice or termination provisions, a variation should be drafted and put forward for agreement.
- Don’t rely solely on statutory notice. The Cropper Case shows that minimum notice periods under the Fair Work Act do not necessarily prevent longer, implied notice terms.
- Watch for role changes. Significant promotions or changes in employment terms may trigger arguments that the original contract has ceased to apply. Variations to an employment contract are key or even a true clarity around the working relationship.
- Mitigate risk with clear drafting. Avoid ambiguity—include explicit rights to terminate on notice or payment in lieu.
Our Employment Lawyers at South Geldard Lawyers have essential expertise in advising on employment contracts and contract drafting. Feel free to reach out on 07 4936 9100 or via email to Jonathan Mamaril, Director at jmamaril@southgeldard.com.au. All Employers receive an obligation free consultation.
