Terminating an Executive Employee

Generally executive and c-suite employees are governed by iron-clad employment contracts and are remunerated above the $153,600 threshold, making them ineligible to make an Unfair Dismissal Claim under the Fair Work Act 2009. Modern awards and unfair dismissal legislation have a limited application for high income employees.

What are the risks associated with terminating your executive staff? 

First and foremost, any employee earning over the $153,600 threshold is ineligible to file an unfair dismissal claim with the Fair Work Commission against their current or former employer. This amount is indexed every year on 1 July.

Regardless of what employees earn, general protection legislation applies to the full spectrum of employees, prospective employees and independent contractors.

General protections were introduced to:

• protect workplace rights;
• protect freedom of association;
• provide protection from workplace discrimination; and
• provide effective relief for persons who have been discriminated against, victimised or have experienced other unfair treatment.

On this basis, section 340 of the Fair Work Act 2009 (Cth) (FWA) prohibits an employer from dismissing or undertaking any other type of adverse action because the employee has exercised or proposed to exercise a workplace right.

What do these workplace rights include?

1. Industrial Activities
   A person must not take adverse action against another person because they engaged in or proposed to engage in industrial activity (such as belonging to or participating in a union), including refusing to participate in any industrial action.
2. Anti-Discrimination
   An employer must not take adverse action against an employee because of an attribute pertaining to race, colour, gender, sexual orientation, age, disability, marital status etc.
3. Sham Contracting Agreements
   An employer must not tell an employee that they are being hired as a contractor if they are really an employee.
4. Workplace Grievances
   An employer must not retaliate against an employee who ‘blows the whistle’ or expresses a complaint in relation to their employment. The courts have taken differing views regarding what constitutes a complaint or enquiry however, the general rule of thumb is that there needs to be sufficient connection between the complaint and their employment.
5. Exercising National Employment Entitlements
   An employer must not take adverse action against an employee exercising a workplace entitlement such as taking maternity or paternal leave.

An executive employee has 21 days from the date of termination to file a general protections claim with the Fair Work Commission. It is important to note that for any general protections application made to the Fair Work Commission, the damages are uncapped and the onus is on the employer to prove on the balance of probabilities that they did not engage in adverse action.

Fortunately, section 723 of the FWA also prohibits an employee from filing an unlawful termination application in relation to conduct if they are entitled to making a general protection court application.

Next Steps

If you’re an employer determining your options with respect to terminating an executive employee, or in receipt of an adverse action application filed by a former executive employee, contact our experienced employment law team at Antunes Lawyers on (02) 9964 0499 to assist with the effective resolution or management of the employee in a time-efficient and cost-effective manner.