Reasonable notice payout lifts employee's damages over $1m

A financial controller sacked by a global shipping company will recover more than $1m after a court ruled she was entitled to ten months' notice of termination of her employment and long service leave based on her full salary package.

The financial controller worked for Expeditors International Pty Ltd and its predecessor for 24 years, forming a strong bond with her managing director to the point where he referred to her as his "watchdog".

When he retired in August 2010, his successor attempted to renegotiate her salary package, then in the vicinity of $700,000 including a substantial monthly bonus.

She refused to accept his proposed reductions, and in June 2011 she was dismissed with five weeks pay in lieu of notice, calculated without reference to the bonus component of her salary.

Annual leave and long service leave payments took her total payout to just over $50,000.

The financial controller sued her former employer in the NSW Supreme Court, claiming that reasonable notice of termination in her case amounted to 12 months, and that the company had calculated her long service leave wrongly.

The company counter-claimed, arguing that she had breached her contractual and fiduciary obligations by approving invoices from a cleaning company linked to her brother.

Acting Justice Henric Nicholas said "the primary purpose of notice is to enable the employee to obtain new employment of a similar nature".

"It is to be determined as at the date of termination, with regard to the facts then existing."

Relying on principles set out in the Victorian Supreme Court's Rankin v Marine Power International decision (see Related Article), he said that reasonable notice in the financial controller's case would have been 10 months.

At the time of her dismissal she was 49 years old, "and had been a loyal employee for 24 years, 5 months", the acting judge said.

"Although not of the top echelon, she held a position of significant seniority for many years as regional controller for the South Pacific region, reporting directly to the [company's] managing director. An accounting team of about 14 people reported to her."

Justice Nicholas said she was required to certify the accuracy of financial information, compliance with internal controls, and other corporate governance matters.

He said her average salary package of $750,000 was "indicative of the high degree of responsibility required of [her], and the dedication with which she discharged it".

Also relevant was that she had been unemployed since her dismissal, and her prospects of finding similar employment were low.

"Ordinary pay" does not include super

In addition to ten months' notice, the court said the financial controller was entitled to have her long service leave under NSW legislation calculated on the basis of her base salary plus the bonus.

The company argued that her ordinary pay under s3 of the Long Service Leave Act included employer superannuation contributions, which took her above the $144,000 threshold beyond which her bonus could not be included in her LSL entitlement.

But the judge said the reference in the "ordinary pay" definition to amounts "received by the worker" meant that the superannuation contributions were excluded, as they were paid into a fund.

This lifted her long service leave entitlement to nearly $300,000, well in excess of the $28,530 the company paid to her on termination.

No conflict of interest

Rejecting the company's counter-claim, Acting Justice Nicholas said it was fully aware "at all material times" of the relationship between her and her brother.

The cleaning contract had been negotiated by her managing director, and he instructed her to only approve invoices if they were within the originally agreed amount. If they exceeded that amount, she was required to take it up with the managing director, which occurred on more than one occasion.

The judge said these arrangements "effectively eliminated the prospect of conflict".

"Put another way, in the circumstances, the potential for a clash of interests never arose."

The court also awarded the employee her pro-rata bonus for June 2011, amounting to $8,138.

Carroll & O'Dea Lawyers represented the financial controller in the case. Partner Peter Punch told Workplace Express the decision should generate "considerable interest" on the principles for assessing reasonable notice, and on the interpretation of "ordinary pay" under the state LSL Act.

The time for appealing the decision has not yet expired.

Susanna Ma v Expeditors International Pty Ltd; Susanna Ma v Expeditors Pty Limited [2014] NSWSC 859 (30 June 2014)