Australia: New South Wales Supreme Court finds senior employee entitled to 10 months reasonable notice of termination

In Susanna Ma v Expeditors International Pty Ltd [2014] NSWSC 859 (30 June 2014), the New South Wales Supreme Court found that the reasonable notice period to terminate the employment of a long serving senior employee was 10 months.

The Supreme Court also found that payment of the employee's accrued long service leave should have been based on salary that included incentive payments which formed part of the employee's remuneration package.

In this In Brief, we examine the decision which again highlights the importance for employers of including an express provision for termination of employment in all contracts of employment.


Ms Ma commenced employment with Samev Pty Ltd (Samev) on 5 January 1987. After Samev entered into a joint venture with Expeditors Inc, Ms Ma's employment was transferred to Expeditors International Pty Ltd (Expeditors) with effect from 1 July 1988. She was told she would have the same salary and arrangements she had with Samev.

In late 1988, Ms Ma was appointed by Expeditors to the position of Regional Financial Controller, South Pacific Region. Ms Ma remained in this position until her employment was terminated by Expeditors on 6 June 2011. Expeditors terminated Ms Ma's employment following a dispute over management's proposal to vary her employment conditions including a 50% reduction in her monthly bonus.

The terms of the relevant contract of employment were contained in a letter dated 26 August 2002. This included salary of $70,000 per annum and an entitlement to a bonus. This was amended to include allowances in 2003. In terms of the amount of remuneration paid to Ms Ma, the bonus represented the vast majority of the total remuneration. There was no express termination provision in the contract.

Expeditors terminated Ms Ma's employment by paying 5 weeks' base salary in lieu of notice. Ms Ma claimed that Expeditors was in breach of an implied term of the employment contract by failing to provide reasonable notice of termination of her employment.

Ms Ma claimed that the reasonable notice period was 12 months and therefore she should have been paid an amount of $757,700. This represented her base salary of $70,000 per annum plus bonuses.


Nicholas AJ of the NSW Supreme Court confirmed that absent evidence to the contrary, a term of reasonable notice is to be implied into a contract of employment. His Honour relied upon well established principles for determining reasonable notice. The length of notice that is reasonable is a question of fact. Therefore it will differ from case to case. It is to be determined after the consideration of all relevant circumstances, mindful that the primary purpose of notice is to enable the employee to obtain new employment of a similar nature.

Applying the principles regarding relevant matters of fact to take into account when determining what is reasonable, Nicholas AJ found that the appropriate period of notice for Ms Ma was 10 months, taking into account the following factors:

  • At the time of termination, Ms Ma was 49 years of age and had been a loyal employee of Expeditors for over 24 years.
  • An accounting team of about 14 people had reported to Ms Ma.
  • Ms Ma held a position of significant seniority and trust for many years as regional controller for the South Pacific region, reporting directly to Expeditors' managing director. This managing director regarded her as trustworthy and honest, and observed that she worked with high attention to detail.
  • Ms Ma received a substantial remuneration package which was indicative of the high degree of responsibility she had and the dedication in discharging it.


Ms Ma argued that the future prospects for her employment at a similar level were poor and that this was a factor to be taken into account when determining the period of reasonable notice. Ms Ma gave evidence of numerous attempts to find similar work to that which she performed for Expeditors. Expeditors disputed that Ms Ma had actively looked for other work. Expeditors argued she had therefore failed to mitigate her loss and that this should reduce the amount payable to her.

Nicholas AJ found that the evidence unequivocally demonstrated the real difficulty for Ms Ma in finding suitable employment with similar responsibility or remuneration. This was a matter to be given significant weight when determining the reasonable notice period. Hence Nicholas AJ rejected Expeditors' argument that Ms Ma failed to mitigate her loss, stating the evidence did not support that argument.


Ms Ma and Expeditors were also in dispute as to the calculation of her long service leave entitlement. Ms Ma argued that the calculation should be based on her base salary plus bonus whereas Expeditors argued it should be calculated on her base salary alone. Given the bonus represented the majority of Ms Ma's remuneration, the discrepancy (and therefore Ms Ma's claim) between the amounts Ms Ma was actually paid and which she argued she should have been paid was $265,373.44.

Under the Long Service Leave Act 1995 (NSW) (LSL Act), the ordinary pay of a worker for the purposes of calculating long service leave entitlements is not to include amounts paid under any bonus or incentive scheme, if the worker's ordinary pay (excluding bonuses, etc) exceeds the amount of $144,000. The threshold issue to be determined was therefore whether Ms Ma's "ordinary pay" was less than $144,000.

Ms Ma argued that her ordinary pay was her base pay and allowances. As that amount fell below the amount of $144,000, her substantial bonuses should have been included in the calculation of her long service leave payment. Expeditors claimed that Ms Ma's calculation failed to take into account any amounts referable to superannuation. The inclusion of superannuation tipped Ms Ma's annual ordinary pay over the $144,000 threshold.

Nicholas AJ found that Ms Ma's employment contract did not provide for an "ordinary time rate of pay" but included a number of components and therefore, Ms Ma's ordinary pay was to be calculated by reference to her "average weekly wage" in accordance with the provisions of the LSL Act. Ms Ma's average weekly wage included amounts "received" by Ms Ma under the provisions of the LSL Act. His Honour found that because the superannuation contributions could not be accessed by Ms Ma, they were not "received" and therefore did not form part of the calculation of her ordinary pay.

As a result, the amount of Ms Ma's ordinary pay was below the amount of $144,000. This meant that Ms Ma's significant bonus was not excluded from the calculation of the long service leave entitlement, increasing the long service leave payment by the amount she claimed, $265,373.44.


Expeditors cross-claimed against Ms Ma arguing that she was guilty of misconduct in failing to disclose an actual or potential conflict of interest.

This placed Ms Ma in breach of her contractual, fiduciary and statutory duties, and would have justified summary termination of her employment, in which case she would not be entitled to the termination payments. Expeditors' Code of Business Conduct required declarations of conflicts of interest; and from January 2010, employees were required to complete Quarterly Certifications in relation to conflicts of interest and related party transactions.

His Honour did not need to determine whether the alleged duties existed because he found there was no conflict. His Honour considered the principles relevant to determining whether a conflict exists:

  • A conflict between interest and duty can arise where the personal interest of the fiduciary is pecuniary or non-pecuniary, or direct or indirect.
  • A non-pecuniary interest includes an interest by way of association, whether by way of kinship or business connection.
  • Not all interests are within the conflict rule, and the interest must give rise to a conflict or a real or substantial possibility of a conflict.
  • The existence of a conflict between interest and duty is not dependent on the fiduciary acting with the intention (purpose or motive) of advancing its personal interests.

Nicholas AJ found that no actual or perceived conflict of interest was established. His Honour found that there was uncertainty regarding the extent to which Ms Ma's brother had an interest in the cleaning business. His Honour also found that Ms Ma was not involved in the engagement of the cleaning company to perform services for Expeditors and nor did she supervise contracts with the cleaning company. In dismissing Expeditor's claim, Nicholas AJ held "it is reasonable to conclude that, but for the very fact of kinship, there was nothing to suggest (Ms Ma) had a personal interest, direct or indirect, in authorising the invoices." Expeditors' cross-claim was therefore dismissed.


  • Check your employment contracts and ensure they contain express notice of termination provisions. There is potential for senior employees with high-level responsibilities to be awarded substantial payments reflecting a failure to provide them with reasonable notice of termination. This is especially the case where the employee has been employed for a substantial period of time and can demonstrate they have performed well and diligently. Although in this case the obligation to pay reasonable notice arose because there was no express right of termination, the obligation will also arise when the contract of employment no longer represents the employee's employment. For example, if the employee has been promoted but the contract has not been updated to reflect the promotion.
  • In another recent decision – District Council of Barunga West v Hand [2014] SASCFC 90 (6 August 2014) – an executive employee succeeded in establishing a claim for 12 months' reasonable notice. The Full Court of the South Australian Supreme Court rejected the employer's argument that the employee was only entitled to five weeks' notice as per the relevant state award.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.