Typo in Employment Contract Costs Toll $176,250 in Payout

A typographical error in an employment contract has resulted in the Australian transport company Toll paying $176,250 to a former manager. Rodney Lord, who had worked for Toll for 34 years, was awarded the sum after a judge ruled that the company had failed to provide adequate notice when terminating his employment in 2021.

Lord, who was earning $235,000 annually as Queensland general manager, was informed by executive general manager Michael Rugendyke that the business was moving in a new direction and required new leadership. Toll offered Lord three months' notice and an ex gratia payment of $58,750 if he signed a release deed.

However, Lord rejected the offer and pursued legal action. The Federal Circuit and Family Court, presided over by Judge Gregory Egan, found that Toll had breached an implied term of the contract. The contract stated that either party could terminate the employment by giving "months' written notice," but crucially omitted the number of months.

Judge Egan described Lord as a "long-term, faithful servant" with a clean employment record, noting his 34 years of service, loyalty, and age (59 at the time of termination) as factors justifying a longer notice period. The judge also commented on the respect due to a long-standing employee. While Lord found other employment within four-and-a-half months, his new role was less senior and paid significantly less, starting at approximately $140,000.

In his decision, published in March, Judge Egan ordered Toll to pay Lord $176,250, representing the difference between the three months' pay he received and what he would have earned during a 12-month notice period. The court accepted Toll's evidence that the termination was part of an effort to restructure the struggling business, which had incurred significant financial losses. Rugendyke stated that the Queensland division was on track to lose about $17 million.

Employment lawyer Roxanne Hart explained that when a contract does not specify a notice period, the minimum requirements under the Fair Work Act do not automatically apply. Instead, courts may imply a term of "reasonable notice," which can be substantially longer than the statutory minimum. Hart noted that this situation often arises in disputes where contracts are unclear or absent, leading to potentially higher payout obligations for employers.