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Executive Employment Issues Print E-mail
The Quarterly 2014


Overview
 
Executive employment law is, in very many senses, an unregulated area of law.  In cases of termination of employment, executive employees, such as medical health administrators, are not typically covered by Awards, Enterprise Agreements or the unfair dismissal protections in the Fair Work Act.
 
In many cases, in dealing with large corporate health sector organisations, it is important as an employee (or potential employee) to take a considered and strategic approach which protects your interests during your employment and after your employment ends.
 
It is therefore prudent to carefully consider the rights and obligations created under your employment contract.
 
The importance of the employment contract
  • The employment rights of senior executive employees (such as Health Administrators) are primarily derived from their employment contracts.
  • To this, Awards and EBAs are unlikely to provide coverage (i.e. confer any rights on employee or impose obligations on employer) for senior executive employees.
  • Large organisations (such as hospitals) commonly seek legal advice as to the careful crafting of employment contracts to their advantage
  • Contracts can be negotiated and should be negotiated where possible.
  • In negotiation, the following rights and issues should be considered carefully:
    • Performance reviews
    • Performance bonuses
    • Commission payments
    • Notice of termination of employment – what constitutes reasonable notice for an executive employee?
    • Redundancy provisions
    • Duration (where it is a fixed term contract)
    • Employment duties/roles
    • Location of employment
    • Ability of the employer to unilaterally change/vary the duties or role of the employee
    • Dispute resolution procedure and procedural fairness provided in such procedure
    • Restraint of trade
    • Process for performance and salary review.
Capacity of the employer to make unilateral changes
 
Particularly where drafted broadly, employment contracts can allow employers to make unilateral changes to your employment, including in relation to your duties and where you work, without consulting with you first.
 
Fix performance bonuses and performance based commission
 
It is prudent to have any performance based remuneration scheme is regulated by objective and clear criteria which does not leave whether payments are made entirely to the employer’s discretion.
 
Notice period

Many employment contracts have a standard 4-week notice period provided for in the event that either the employer or the employee wishes to bring the employment to an end. 
 
It is our view that 4 weeks’ notice is insufficient in the cases where the employer terminates a senior executive.  In our experience, it usually takes senior executives a period between six to nine months for an executive to secure an equivalent position elsewhere. 
 
Post-employment restraints
 
Restraint of trade clauses in employment contracts require close scrutiny, lest the effect of such clauses is to lock you out from the medical and health industry. 
 
Severance and redundancy
 
The Fair Work Act 2009 (Cth.) prescribes minimum standards in relation to redundancy (calculated by reference to years of service) which are not necessarily commensurate with the loss suffered by executives when they are made redundant.  
 
Disciplinary process
 
Contracts should ideally provide for fair process in the disciplinary process, particularly in circumstances where senior executives are not covered by unfair dismissal laws?
 
Conclusion
 
It is prudent for executive employees to consider, review and obtain advice about the terms of their employment contracts.  It is our experience that each employment law issue is unique and highly variable depending on a number of issues including the circumstances of each case, the employment contract in question and the effect of the employers’ policies.

Kamal Farouque and Enrico Burgio
Maurice Blackburn Lawyers

The Royal Australasian College of Medical Administrators
Mr Kamal Farouque & Mr Enrico Burgio, , p681
www.racma.edu.au /index.php?option=com_content&view=article&id=681&Itemid=394