Executives have a host of employment rights if their employment is terminated without agreement

The unfair dismissal laws contained in the Fair Work Act 2009 (FW Act) protect employees earning up to $118,100 plus the 9% statutory superannuation (indexed by a CPI formula on 1 July each year), or those covered by an award or enterprise agreement irrespective of income. It excludes employees on fixed-term contracts whose employment ends on the expiry of the contract and employees in the first six months of employment (or 12 months for employees in organisations employing less than 15 employees).

The excluded class of 'high income' employees are treated as 'sophisticated investors', capable of creating and protecting their own employment interests. However their rights are not enshrined alone in beautifully crafted contracts: they have a range of other statutory and common law causes of action at their fingertips in the event of termination. Although these causes of action do not always receive the same attention as the unfair dismissal laws, the underpinning rights and protections are often more powerful tools because compensation is not capped and the courses of action apply to all stages of employment. Of course all employees have these rights, but they are particularly pertinent for the 'executive' class.

In Moss v Lowe Hunt & Partners Pty Ltd, an advertising executive who owned his own business accepted an offer of employment with one of his key clients as its strategic planning director, however within 18 months the position was made redundant and his employment was terminated. The executive settled his personal claim against his former employer but brought an action in the Federal Court on behalf of his business (which he had to re-establish following termination). On behalf of his business, the executive claimed that the managing director of the company made misleading representations about the health of the company, including that recent redundancies within the company had saved the company money and placed it in a healthy financial state, and that these representations induced the executive to take up the position.

Justice Katzmann of the Federal Court awarded the executive's business $306,740 for loss of profits because her Honour was satisfied that the executive was 'unlikely to have accepted the job offer if he thought he would be made redundant within 18 months of doing so' and the managing director's misrepresentations had 'lulled him into a false sense of security'.

An aggrieved employee whose employment is terminated earlier than expected will look back to the promises made at the time that he or she was engaged. Given the potential range of compensation for highly paid executives, employers and recruitment agencies acting on behalf of employers must tread carefully when courting potential executives and drafting the contract of employment that will form the basis of the relationship.

The decision to dismiss an executive is a difficult decision in any circumstance. The absence of unfair dismissal laws does not lessen the burden on employers when making the decision to terminate. Employers must be vigilant and ensure the relationship established during pre-employment negotiations is sound, the employer complies with all contractual requirements and common law obligations and the reason for termination is not, and cannot be perceived as, an unlawful reason for termination. And watch out for the email sent by one of the decision makers in the organisation that destroys your carefully prepared legitimate decision process that pops up during the interlocutory proceedings...

- -

The full story is available at Mondaq. 12.00 Normal 0 false false false EN-AU X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;}

Need to ensure everyone in your organisation - from management through to part time, remote and new staff are fully aware of your policies and procedures?

PolicyPoint is the easy-to-use engine for ensuring all staff – from board level down – are aware of, and understand the policies and procedures you need them to know. Contact us for more information on how to help boost staff performance while increasing awareness of compliance obligations.

12.00 Normal 0 false false false EN-AU X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;}

Need to ensure everyone in your organisation - from management through to part time, remote and new staff are fully aware of your policies and procedures?

PolicyPoint is the easy-to-use engine for ensuring all staff – from board level down – are aware of, and understand the policies and procedures you need them to know. Contact us for more information on how to help boost staff performance while increasing awareness of compliance obligations.