Negotiating an executive employment contract

Executive-level positions provide more than a salary – your remuneration package may include benefits such as bonuses, accommodation, travel, share options and commissions. Your ability to work, or not work, may also be restricted by your employer. Therefore, it’s vital to review and negotiate the terms of a contract before you take on a new role.

If you’re in a senior managerial or executive position, you’re unlikely to be covered by any form of collective agreement or award. Instead, your employment contract generally forms the basis of your employment rights. Having said that, you still have the benefit of the National Employment Standards within the Fair Work Act.

There may be documents that outline agreements you’ve made directly with your employer, such as bonus schemes and retrenchment policies. There may also be company-wide policies that apply to all employees in your workplace. However, when your employment conditions can be gained from various sources they can be seen as guides for the employer rather than part of a contractual agreement, so it’s advisable to seek a binding agreement for your rights where possible.

Terms to consider negotiating

During a negotiation process you may not receive everything you request, so think about the things that are most important to you and make sure they are a priority in your negotiations. For example, guaranteed ongoing commission payments that form a significant portion of your income might be important to your financial security, or, if you’re considering having children during the next few years, a parental leave clause might be a key item you want to include.

Other things to look out for include:

    • If you have incentive schemes in place, make sure they aren’t completely discretionary (for example, where the employer has the right to review the payment of a bonus).
    • Almost every draft contract I have seen gives the employer the right to terminate the employment with four weeks’ notice. If you want some protection from dismissal built in (keeping in mind that you don’t have access to unfair dismissal laws when you earn over $140,000 per annum), then you can build that into your contract. For example, a sentence such as ‘the employer must have just cause for terminating the employment’ can be effective, or a clause that allows you to respond to the reasons for termination before the decision takes effect.
    • If your new employer has a strict restraint of trade restriction, you need to ensure there is an exemption on this for clients you have brought with you. This will help to make sure you can take those clients with you when you leave this employer.
    • Look at restraint of trade clauses generally, because employers often try to make them as broad and onerous as possible. You can negotiate on the length of time to which a restraint is enforced, or minimise the geographical area of the restraint.
    • Most contracts discuss the company’s policies that are binding on you as the employee, but not on them as an employer. If you want these policies to be binding on the employer as well, it may need to be stated in the contract. This might apply when, for example, a parental leave entitlement is stated in a company policy, because it can be discretionary or changed without notice. Make sure your employment contract covers all the conditions relevant to your employment.

The contract negotiation process

The best time to negotiate is at the start of your employment, not later when things are going pear-shaped.

When an offer of employment has been made, you can ask to see a draft of the employment contract. If you wish to negotiate the terms of the contract, you’ll need to move quickly in order to show the employer that you are interested in the role, and to make a good impression. It’s important to act professionally and calmly during the negotiation process. Make it clear that you’re keen to take on the position, however you would like to negotiate the contract. Do your best to have the negotiations completed within one week at the most.

It can be a good idea to draft the changes you would like made to the contract so there is no ambiguity about what you want.

If you’re unsure about what you can negotiate or how to go about it, you should seek legal advice. This is particularly useful if there are complicated or unusual clauses to be negotiated, such as a share-based incentive scheme which may expose you to risk, or if you’re taking on a director role in addition to your executive duties.

TOPIC: Employment law
RELATED LEGAL SERVICES: Employment law

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Giri Sivaraman

Maurice Blackburn Brisbane
Giri Sivaraman is a Principal at Maurice Blackburn. He is the head of the firm’s Queensland Employment law department based in Brisbane, which is listed by the highly respected Doyle's Guide to the Australian Legal Profession as one of two top tier law firms for employees in Queensland. Giri is recognised as a preeminent lawyer for employees in Queensland by Doyle's Guide and he is a member of the Law Society of Queensland employment law subcommittee. He is also a LSQ accredited specialist in workplace relations and a Law Society of NSW accredited specialist in employment and industrial law. Giri has 15 years’ experience providing a full range of legal services to executive and employment law clients including CEOs of ASX 200 listed companies, the CEO of a prominent NGO, the CEO of a large software developer, executives in the financial and banking sectors, medical professionals, senior public servants, senior marketing executives and incorporated associations. Giri sees clients throughout Queensland and provides advice and legal representation in all areas of employment law including workplace bullying, employment contracts, redundancy, restraint of trade, discrimination, sexual harassment, adverse action, and unfair dismissal. He is also experienced in representing employees including very senior executives who are the subject of workplace investigations and disciplinary processes. Giri has negotiated a number of significant out of court settlements, and notes that the vast majority of his cases are successfully settled without going to court. He is conscious of the discretion required when dealing with people’s livelihood and reputation, noting that legal action is not often something a client will want splashed across the front page of the major newspapers. His significant cases include: headed the pro bono scheme for underpaid 7-Eleven workers run by Maurice Blackburn bringing one of the first successful adverse action cases under the new Fair Work Act representing an aircraft engineer who had his work rights breached representing Aid/Watch in the High Court, successfully challenging the Australian Taxation Office’s decision to deny it charitable status. This case significantly altered Australian tax law and enabled many charities to retain their charitable status successfully resolved breach of contract claim for CEO of multinational software company winning a discrimination case on behalf of a Senior police officer dismissed for discriminatory reasons defending and assisting the CEO of an ASX 200 company in response to serious allegations of harassment, and appeared before the Commonwealth Government Parliamentary Inquiry into corporate avoidance of the Fair Work Act. Giri’s influence as a thought leader in employment law in Australia is also well recognised. He addressed the Commonwealth House of Representatives Standing Committee on Employment on the need for new anti-bullying laws, and was delighted to see those laws enacted in 2014. He was also invited to make submissions to the NSW Parliamentary Inquiry into Bullying at NSW WorkCover, and is a regular contributor to public debate on employment issues. He also helped provide the seed which grew to establish Unions 4 Refugees in Queensland. Memberships and awards Preeminent Employment Lawyer in Queensland - Doyle's Guide 2017 Leading Employment Lawyer in Queensland and Australia - Doyle's Guide 2016 Recommended Employment Lawyer - Doyle's Guide 2014 & 2015 Law Society of Queensland employment law subcommittee Queensland Law Society member NSW Law Society member  ...

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