An executive employment agreement (or contract) is crucial for both the employee and the employer. As a key source of regulation for the executive employee, it sets out the terms and conditions of employment, your rights and obligations and how both parties’ interests can be protected.
If you’re in a senior role, it is vital that your employment contract is carefully reviewed and negotiated before you sign on the dotted line. Read on to learn how to negotiate your executive employment agreement or speak to the executive employment lawyers at Owen Hodge.
What is an executive employment agreement?
An executive employment agreement (or contract) is an agreement between the employer and employee setting out the terms and conditions of employment.
The agreement must also provide the employee with their minimum legal entitlements outlined in the National Employment Standards under the Fair Work Act 2009.
For most senior executives, their executive employment agreement will go beyond the minimum entitlements and may include bonuses, housing or accommodation, share options, relocation allowances and so on.
Does a director need an employment contract?
We recommend that directors should have a written employment contract — especially since they outline your rights and obligations and conditions of employment.
What should be included in an employment agreement for executives?
In addition to the minimum conditions of employment outlined in the Fair Work Act, the following may be included in executive employment agreements:
- The executive’s position and duties
- Hours of work
- Remuneration and other benefits
- Bonuses and incentives, such as:
- Sign-on bonuses
- Commissions
- Relocation allowances
- Share options
- First-class air travel
- Holidays
- Termination of employment provisions
- Restraints of trade (such as gardening leave) – more on this below
Executive terms to consider negotiating
When it comes to executive employment agreements, it’s vital that you carefully review the terms and conditions and negotiate where necessary. Our executive employment lawyers suggest you consider the following:
Restraint clauses
An employment contract, especially for senior positions, will often include restraint of trade clauses. Such as:
- Confidentiality clauses
- Anti-compete restraint clauses
- Non-poaching restraint clauses
- Clauses that require the employee to take gardening leave
The future implications and operational period of these clauses should be carefully considered before signing the contract.
Termination provisions
This can include negotiating your:
- Executive redundancy pay
- The notice period of termination
- Protections against unfair dismissal (keeping in mind that you don’t have access to unfair dismissal laws if you earn over the unfair dismissal threshold)
Bonuses and incentive schemes
As a senior executive, there may be specific bonuses or incentives that are important to you. These could include:
- Relocation expenses (including airfare and accommodation) if you are moving for the role.
- Commission payments that form a significant part of your income.
- Parental leave arrangements (that go above your minimum parental leave rights) if you plan on having children.
You may not receive everything you request, so focus on the items that are important to you and make them a priority in the negotiation process.
Your rights and obligations
An employment contract creates a number of rights, liabilities and obligations. Before signing, make sure that you understand and consent to all of them.
If you require any assistance with this, please don’t hesitate to get in touch with Owen Hodge’s employment lawyers.
Executive employment agreement disputes
Disputes involving executive employment contracts can be complicated. If the executive employee earns over the unfair dismissal threshold ($158,500 as of July 2021), the unfair dismissal remedy under the Fair Work Act is unavailable. However, if a senior employee was wrongfully terminated, they may still be able to take legal action.
Learn more: difference between unfair dismissal and wrongful dismissal
Likewise, an employee or employer may also seek legal action for any of the following:
Speak to our executive employment contract lawyers
When it comes to negotiating an executive employment agreement or contract, you need a lawyer you can trust. At Owen Hodge, our executive employment lawyers have extensive experience in negotiating contracts that satisfy both parties.
Whether it’s drafting favourable termination clauses or reviewing conditions of executive bonus structures, the team at Owen Hodge can assist you. If you’re a middle or senior level executive, call us on 1800 770 780 to discuss your executive employment contract.