Senior manager: six months notice over wrongful dismissal

Cases

Senior manager: six months notice over wrongful dismissal

In the course of finding that a senior manager had been wrongfully dismissed (summarily) for unauthorised personal spending on the company account, the Federal Circuit Court noted that senior managers can generally expect at least six months notice on termination even when they have been in their job for only a short period of time.

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In the course of finding that a senior manager had been wrongfully dismissed (summarily) for unauthorised personal spending on the company account, the Federal Circuit Court noted that senior managers can generally expect at least six months notice on termination even when they have been in their job for only a short period of time.

Background

A verbal contract was in issue because the matters in contention had not been committed to writing.

Justice Simpson heard that the manger had been dismissed after 13 months — the owner accusing him of unauthorised spending on the company account.

The court found that the manager had operated on a fair assumption that he was entitled to use the company credit card for personal expenses on the understanding he would later reimburse the company.

Manager’s evidence preferred

The court preferred the evidence of the manager over the owner:
‘… [it was] far better to have all business and all private transactions made with the use of the one card and to then determine, on return to Australia, which items should be considered private (and therefore refundable to the Company) and which items business and therefore claimable in the submission to Austrade ...
 
There was no element of subterfuge … He was at all times transparent in his dealings …’  
The court also has reservations about the way the owner approached the matter:
‘… it was wrong and quite unbusinesslike for Mr H to have approached Mrs M [manager’s wife] at her home uninvited, and to again make such serious allegations about Mr M’s behaviour …’
Notice

The court awarded payment of six months notice — referring generally to the assessment of notice for senior managers:
‘… The general rule is that the longer the employee has worked for the employer and the more senior and important the position they occupy, the longer their entitlement.

Senior managers can generally expect at least six months’ notice even when they have been in their job for only a short period of time … [see: Lau v Bob Jane T-Marts Pty Ltd [2004] VSC 69;  and Thorpe v South Australian National Football League (1974) 10 SASR 17]’
Suspension without pay not available

The court also noted that suspension without pay is generally not available at common law:
‘It is not permissible at common law for an employer to suspend an employee without pay even in circumstances where it is thought that the employee has breached his or her contract of employment in some way.

Hanley v Pease & Partners Ltd [1915] 1 KB 698; Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 472; Australian Workers’ Union v Stegbar Australia Pty Ltd [2001] FCA 367  

… If an employer suspends, it must be on the basis that the employee continues to be paid their full entitlements …’
A total of $35,808 was awarded to the manager.

Message: Employers should be aware that senior employees are entitled to longer periods of notice on termination than other employees, and these periods can be in excess of the notice period provided in a contract of employment if the contractual provision is deemed unreasonable.
 
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