Home Articles Stop! Do not sign yourself into an executive level contract of slavery!

Stop! Do not sign yourself into an executive level contract of slavery!

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The minimum conditions of employment as laid down under Fair Work Act 2009 (FWA) uniformly apply to everyone including the most senior executives. However, minimum conditions are simply guidelines for deciding the basic circumstances of work and these have to be customised according to the specific requirements of the employee.

Do you know what happens in case of a dispute? The Fair Work Act steps in with an independent dispute resolution mechanism. Unfortunately though, this does not really help for middle to senior level executives that much in resolving their contractual disputes. Common law courts are inevitably the appropriate court of judicature.

Why is this so?

Fair Work Australia, a tribunal set up under the Fair Work Act provides a salary cap (currently $123,300) which means it can do nothing for senior executives earning high salaries and pay packages. This is one of the major reasons why the Fair Work Act is not yet unitary and uniform.

What can executives do to protect themselves?

The onus therefore falls on the executive employees to negotiate and customise their terms and conditions of employment. Therefore, an employment contract should be negotiated after careful consideration and scrutiny of the key terms of the contract. The contracts of senior executives in Australia mostly favour the employers but here is a checklist of key items to keep in mind.

1. Specific terms and conditions

An employment contract must clearly specify the terms and conditions of the contract and there should not be any confusion regarding the position and designation, pay package, incentives and notice period.

2. Company policy and procedural manuals

An employment contract should never mandate that consent to the contract automatically includes the employee’s consent to the company policy and procedural manuals. In such a case the terms and conditions of employment could easily be altered simply by amending the terms of the Company Policy and Procedural Manuals.

3. Creation of Rights

An employment contract creates a number of rights and liabilities. If the employment is not bound by a specific contract, then the terms will most likely be guided by common law principles which are obviously often far more beneficial and reasonable. Should you suddenly be required to sign an employment contract, it should be carefully scrutinised since it may introduce a lot of post-employment restrictions.

4. Proper analysis of restraint clauses

An employment contract often includes various clauses including restraint of trade clauses. The future implications and operational period of these clauses should be carefully considered before signing the contract.

5. Careful scrutiny of all the related documents

The employment contract guides the entire period of employment and post-employment rights and liabilities of an employee. Thus, a careful scrutiny of all the documents referred in the contract like company policy and procedural manuals should be done before agreeing.

Rolf Howard is the Managing Partner of Owen Hodge Lawyers. He is a entrepreneurial thought leader, and his focus is central to the needs of an array of individual and business clients. Rolf is a keen blogger and enjoys networking widely, both virtually and socially.

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