Executive decision time

TOP executives may need to rethink their contractual provisions as a result of the new Labour Relations Act, which has removed their ability to have unfair dismissal claims or denied contractual benefit disputes heard by the WA Industrial Commission.

A section of the act removes the right of those who earn more than $90,000, and are not bound by an award, to have unfair dismissal and denied contractual benefit claims heard at the WAIRC. This effectively leaves executives with the more rigid option of heading to the civil courts.

While the change may pro-vide reduced payouts for employers, it also will necessitate the drawing up of more detailed contracts.

Jackson McDonald work-place relations team partner Greg Smith said while there was not a big difference in the way the WAIRC and the courts determined denied contractual benefits, the courts’ determination of unfair dismissal could restrict damages payments.

“An application in the courts is made under a wrongful dismissal and is based entirely on the contract. Unless the contract specifically provides some specific mechanism for fair dismissal, then the issue does not ordinarily arise,” he said.

“In the Industrial Relations Commission you could comply with all the terms of the contract but it could still be found to be unfair because of legislation.”

There also was the difference in damages awarded.

“Wrongful termination dam-ages will usually be much more limited because it is based on the contract, or the term of notice, but if it is not written in the contract it will be determined as reasonable notice,” Mr Smith said.

“The WAIRC has the power to award up to six months’ remuneration as compensation, and if the employer has breached the employment contract, the commission can also award a payment for contractual entitlements.”

He said the damages awarded by the WAIRC and the court would depend on the terms of the contract and the conduct of the parties concerned.

Mr Smith said that, in light of recent decisions and the closure of a compensation mechanism, executives might start to seek clearer contracts with the inclusion of specific provisions.

“There may be more detailed negotiations over executives’ contracts; you would want to make sure your contract is more robust,” he said.

“There are a number of issues, including the recent decision by the Industrial Repeal Court that removes the implied term of redundancy payment, which means that executives may seek much clearer provisions, such as their entitlements if the contract is terminated and guidelines for termination.”

It is not expected that the new provision will have a huge impact on the industrial system. According to the WAIRC annual report (2000-2001), just 6 per cent of applications of unfair dismissal and denied benefits claims were made from people earning approximately $80,000.

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