How a typo in an employment contract cost Aussie transport giant Toll $176,250 after sacking long-time manager
A single missing word typo in a contract has cost Australian transport giant Toll $176,250 after a judge ruled a long-serving manager should have received 12 months’ notice when he was sacked.
Queensland general manager Rodney Lord was earning $235,000 a year when he was let go in 2021.
He said Toll executive general manager Michael Rugendyke had told him ‘the business was heading in a new direction and needed new leadership’.
Federal Circuit and Family Court Judge Gregory Egan found that Toll breached an implied term of Mr Lord’s employment contract by failing to give him 12 months’ notice when his job was terminated.
The unusual case arose from a drafting error in his contract, which stated either party could end the employment by giving ‘months’ written notice’ but failed to specify the number.
At a meeting in Brisbane on March 9, 2021, Toll executive general manager Michael Rugendyke handed Mr Lord a termination letter giving him three months’ notice.
Mr Rugendyke also offered him an ex gratia payment of $58,750 if he signed a deed releasing Toll from future claims, the court heard.
But Mr Lord rejected the offer and later launched legal action.
A missing word in an employment contract cost transport giant Toll $176,250 after a court ruled Rodney Lord (pictured) was entitled to 12 months’ notice instead of three months
Toll executive general manager Michael Rugendyke (pictured) handed Mr Lord the termination letter. He later told the court: ‘I had to make decisions to turn the business around’
The court heard Mr Lord had spent 34 years climbing through the ranks of the Toll Group, beginning as a supervisor in Toowoomba.
He then became the general manager for Queensland in 2018, overseeing the company’s largest state operation by depots, deliveries and employees.
Judge Egan described him as a ‘long-term, faithful servant’ in his decision, published in March this year.
‘There was no evidence that during such period of employment Lord had committed any act which constituted misconduct, gross negligence or insubordination. He had a clean employment record and was well liked and loyal,’ he said.
Judge Egan said Mr Lord’s lengthy service, loyalty and age justified a much longer notice period than the one he was given.
‘Further, for such a long-standing employee, the notion of respect ought also to have been one of the factors to be considered when fixing the termination notice period in respect of Lord’s employment,’ he added.
‘At that age, Lord’s prospects of transitioning to a position of equal pay and equal seniority were limited.’
Mr Lord also alleged in court that he had been dismissed because of complaints he made about an executive he accused of bullying him, but the claims were rejected and Toll’s evidence that the termination formed part of a broader effort to overhaul the struggling business was accepted.
Lawyer Roxanne Hart (pictured) said that if a contract provides for the minimum notice required under the Fair Work Act, an employee in Mr Lord’s position would have been entitled to five weeks’ notice
‘I had to make decisions to turn the business around for the future,’ Mr Rugendyke told the court.
He said Toll had lost $42million overall, while the Queensland business was on track to lose about $17million.
‘The way I saw Mr Lord taking action on costs and the management of service and his presence in the Queensland business, where we needed him the most, that was lacking,’ he said.
Judge Egan noted that, after leaving Toll, Mr Lord found work with rival transport operator Followmont Transport within about four-and-a-half months.
However, the new role was less senior and paid substantially less, with a starting salary of about $140,000 compared with the $235,000 he earned at Toll.
In finding that 12 months’ notice was appropriate, Judge Egan pointed to Mr Lord’s 34 years of service, his clean disciplinary record and his seniority within the business.
He also noted Mr Lord’s limited prospects of securing a comparable role at age 59 and, unusually, what he described as the need to show a long-serving employee respect.
As a result, Judge Egan ordered Toll to pay Mr Lord $176,250 for its breach of an implied term of the contract by failing to give 12 months’ notice.
Mr Rugendyke told the court Toll had lost $42million overall, while the Queensland business was on track to lose about $17million
The sum sought by Mr Lord represented the difference between what he was paid during the three-month notice period and what he would have been issued had he been given 12 months’ notice.
Employment lawyer Roxanne Hart said the mistake proved costly because, had the contract simply referred to the minimum notice required under the Fair Work Act, Mr Lord would have been entitled to only five weeks’ notice rather than a year.
‘But what happens is, if the contract does not specify the notice period, the minimum Fair Work Act doesn’t actually apply,’ she said.
‘That’s essentially just a floor, but that’s not the maximum.
‘So the court will go ahead and apply reasonable notice into the contract, which can be substantially more than what the business is expected to pay.’
Ms Hart said disputes surrounding notice periods usually arise when there is no valid contract in place.
‘Then we have to tell the business, “Well, when you terminate this person, it’s not the Fair Work Act minimum notice period, you’re actually going to have to give them more notice because you need to give reasonable notice”,’ she said.
‘It’s always a confusing discussion with the business because they say, “Well, why don’t we just give the Fair Work Act notice?” But it doesn’t work like that.
‘There is that implied term of reasonable notice, which can be much more.’
