What you need to know about public sector executive contracts

07 Feb 2018

Last month we looked at how to get a fair deal in an Executive remuneration package and following on from that it is useful to examine what is actually in a contract of employment for public sector Executives.

This will be especially useful if you are on the cusp of securing your first executive contract, or if you are a clinical manager moving from an Enterprise Agreement to a term executive contract. However even for “seasoned” health service executives, it is useful to remember that public sector contracts are constantly evolving and as time goes on the emphasis on “accountability” has increased and you may have some new clauses, and therefore expectations of you, in your new executive contract.

Each jurisdiction has their own version of a public sector executive Contract of Employment. Examples of these are mostly available online and will provide the full details of the expectations of executives entering into an executive role. It is also important to know and refer to the relevant Public Sector Act (however named) in each jurisdiction as there are often sections within these Acts that relate specifically to Executive employment and these are often referred to in the Contract of Employment. 

Common things to look out for in executive Contracts, which differ from permanent employment under an Enterprise Agreement, include: 

The term of employment is spelt out in the Contract and is generally between 1 – 5 years. This is sometimes expressed as 3 +2 in advertisements which just means an initial contract offer of 3 years with a right to renew of an additional 2 years. If this is the case the Contract will provide details on the renewal process and expectations.

The Contract will express the duties required of the specific role, usually appended to the Contract, often as the Role Description. The Contract may also specify general expectations of executives working in the public sector and the requirement to obey all lawful and reasonable directions of the CE or any authorised person.

Executive Contracts generally have a clause relating to performance expectations and stipulated timeframes in which performance review is expected to occur. Specific performance criteria related to the role itself is often appended to the Contract. Performance criteria and expectations is one of the areas that have been increasingly emphasised in public sector employment contracts. Expectations of the line manager as well as the individual Contract holder are often spelt out in these clauses.

Some jurisdictions have included a clause about performance development. It is to the benefit of the Contract holder to understanding their entitlements in this space. One jurisdiction has specified the entitlement to 2 “significant” development opportunities during the life of a 5 year contract.

Prior to expiration of a Contract, the contract itself will specify the timeframe in which notice must be given by the Chief Executive to a Contract holder of whether there is an intention to renew the Contract and on what terms. The timeframe for this differs from 6 months out from expiry to 2 months from expiry.

Should notification be given within the appropriate timeframe that the Contract will not be renewed, there are often clauses within the Contract that specify outplacement and counselling support entitlements.

Most executive Contracts of employment allow for termination by the Chief Executive or other authorised person, without the requirement to provide reasons for the termination. In this case there is a requirement to give the notice in writing and adhere to the stipulated notice period.

There are often entitlements to payment as a result of a Chief Executive terminating the contract with no reason given and the Contract of employment will specify these entitlements or refer the Contract holder to the relevant Act and clause. Some jurisdictions also specify prohibition periods, where upon receipt of a payment due to termination, an Executive is prohibited from taking on public sector employment.

It should be noted that there are no entitlements to payment should the Contract be terminated in order for the Executive to be appointed to another position in the service of the State or on grounds of unsatisfactory performance, misconduct or mental or physical incapacity.

Contracts often include a clause, or refer to this matter in other clauses, about outside remunerative employment, occupation or business.  Permission is generally required from the Chief Executive for an Executive to take on outside employment or operate a business whilst holding a public sector executive role.  Prior authorisation is generally required in writing and the Chief Executive will generally consider impact on the primary responsibilities of the Executive as specified in the Contract and any potential conflicts of interest. 

Some but not all executive Contracts also include clauses on the following. It is important to remember that whilst it may not always be specified in the Contract of Employment it may be general public sector policy which also applies to holders of executive contracts.

The Contract of Employment is an important document which outlines both your rights and responsibilities. You should ensure that you understand the Contract that you are entering into and that should your role change substantially during the life of your Contract that you ask that your Contract be updated accordingly.