Court implies 12 months' notice for a senior manager whose contract left it open
A missing number in a termination clause just cost Toll Transport $176,250 in compensation.
On 11 March 2026, the Federal Circuit and Family Court of Australia handed down its decision in Lord v Toll Transport Pty Ltd, ordering the company to compensate a long-serving General Manager who was terminated with just three months' notice, despite a contract that never specified how much notice was required.
The case centred on a single overlooked detail in the employment contract. Clause 7(a) of Rodney Lord's written contract, dated 6 July 2018, stated that either party could terminate employment "by giving months' written notice." The actual number of months was never filled in.
Lord had been part of the Toll Group since 1988, rising through the ranks over 34 years to become General Manager Queensland, earning $235,000 per year. On 9 March 2021, he was called to a meeting at Toll's Brisbane office, where he was handed a termination letter giving him three months' notice. The reason given was that the company "was heading in a new direction under new leadership." At the same meeting, Rugendyke offered Lord an ex-gratia payment of $58,750, conditional on his signing a Deed of Release that would have precluded him from instituting the subject proceedings. Lord refused.
With no notice period specified in the contract, Judge Egan determined that a reasonable period should be implied. The court weighed Lord's 34 years of service, his seniority, his clean employment record, his age of 59 at termination, and his limited prospects of securing comparable work. Lord did find a new role with Followmont Transport roughly 4.5 months later, but it was a substantially less senior position at a starting salary of $139,726, well below what he had earned at Toll. The court determined that 12 months was the appropriate notice period and ordered Toll to pay $176,250, plus interest at the statutory rate.
Lord had also brought separate claims under the Fair Work Act 2009, alleging his termination was adverse action linked to complaints he had raised over several years about workplace bullying by a former Executive General Manager. The court dismissed those claims. Judge Egan accepted the evidence of Michael Rugendyke, the decision-maker, that the termination was genuinely motivated by the need for new leadership direction amid serious financial difficulty. The Toll Group had posted a loss of $685.3 million for the financial year ended 31 March 2020, and the Queensland business was tracking towards an EBIT loss of approximately $17 million in the year of Lord's termination.
The court found it significant that Lord was the fifth person of equivalent seniority whose employment Rugendyke had ended through redundancy, forced resignation, or termination after assuming his role in November 2020.
The court also heard that Lord's bullying complaints had been received by an HR manager, who chose not to escalate them because Lord had indicated he did not want to make a formal complaint. This was relevant to the court's assessment of whether senior decision-makers knew about, or were influenced by, those complaints.
A detail that drew the court's attention was a congratulatory group email Rugendyke sent just five days before the termination meeting. The court accepted his explanation that the email went to around 200 people and reflected collective team performance.
As Judge Egan observed when assessing the notice period: "Lord's loyalty and historical knowledge was a valuable asset to Toll across the board and had been for a long period of time."
The factors the court applied in setting the notice period are directly relevant to how organisations manage senior departures: length of service, age, seniority, employment record, and realistic prospects for comparable re-employment. The court was clear that the employer could not unilaterally impose a three-month notice period where the contract, as signed, had left the question unanswered.
