Executive Employment

Effective negotiation of an executive employment contract is imperative for both prospective employees and employers. By fervently advocating your own or your business’ interests, negotiation will provide for balanced outcomes and will foster a strong working business relationship.

Executive employees are those employees that operate at managerial levels, extending from junior managers to senior executive roles. Employers are generally assumed to hold the majority of bargaining power in the negotiation of executive employment contracts. It is therefore strongly advised that prospective executive employees conduct a very thorough and careful review of the employment contract. Key matters requiring examination during negotiation include, but are not limited to:

  • The specific terms and conditions of the contract;
  • The rights and liabilities of the prospective executive;
  • The rights and liabilities of the employer, such as the ability of the employer to terminate the contract and the corresponding notice period;
  • A reference to automatic consent to other documents, such as company policies and procedures;
  • The nature of incentive schemes, particularly whether or not these are at the complete discretion of the employer; and
  • The existence of any limitations, such as restraint of trade clauses.

The position of prospective employees is protected by minimum standards provided under the Fair Work Act 2009 (Cth). Beyond setting guidelines for work environments, this Act is also useful for employees in the context of unfair dismissal. Unfortunately, there are many obstacles involved in this process, so much so that unfair dismissal remedies will often be of no relevance to the majority of senior executives. For example, the Act provides for an independent tribunal to resolve labour law disputes. To the detriment of high-earning executive employees, a remedial application in this context is limited to those earning a salary below the cap of $123,300. This point emphasises that it is especially important for prospective senior executives earning high salaries to ensure that their employment contract provides them with adequate and effective protection.

The prospect of unequal bargaining power held by employers should not be considered by prospective executives to mean they are always inevitably placed in a ‘take or leave it’ position in contractual negotiation. It ought to be remembered that the development of trust and confidence between the parties is integral to a fully functioning business relationship, and significant time and effort has been expended by the prospective employee and employer at this point. Adopting an oppressive or unrealistic negotiation position would jeopardise this relationship, which would not be in the interests of either party.

Employers should demonstrate due care for their prospective employees at all levels to ensure trusting relationships are initiated and maintained. This will provide for continued dedication and loyalty from employees into the future. The positive, encouraging culture of the corporation and the satisfaction of its employees are vital parts of any strong and successful business.

Contractual negotiation is evidently, a very important part of establishing a positive, working relationship. Although this can be a complex and difficult process to navigate, prospective employees and employers would do well to adopt a balanced but assertive position to ensure the best outcomes for both parties.

To find out more about Executive Employment check out our Resources Centre. If you need any further advice about the issues in this article, please get in touch today!

This article was authorised by Warwick Heeson

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