Before you sign any employment contract, have it reviewed by our professional employment lawyers
Executive employment contracts are often lengthy and difficult to understand. They can contain complex remuneration packages and post-employment restraints that could cripple your career.
We can provide targeted advice that helps you navigate your employment contract and determine whether it aligns with your aspirations and goals.
Post-employment restraints can hold your career back in the future
You should be particularly mindful of the operation of restraint of trade clauses after you cease your employment. These clauses may prevent you from setting up or working for a competitor who operates within a defined geographical area for a particular period of time, or from soliciting the business of any of the employer’s clients.
Restraints of trade are enforceable if the employer proves that the restraint is necessary to protect their legitimate interests. This may not be the case if the restraint runs for an excessive period of time, covers a geographical area that is too broad, or extends beyond the industry in which your employer primarily operates.
How gardening leave can affect you
Gardening leave provisions require executive employees to take an extended period of paid leave at the end of their employment. This can prevent you from working for another employer, or starting your own business, for the period in which you are on gardening leave.
They may not be enforceable, though, if the contract grants the employee an express or implied right to receive actual work from that particular employer.
Discretionary payments and bonuses
Executive employment contracts often include provisions that allow employers to make discretionary bonus payments on the basis of performance.
Here are a couple of examples of discretionary bonus payments:
- Lucy is the Chief Financial Officer of a large marketing company. Her contract says that she will be eligible for a bonus of $50,000 if the Chief Executive Officer is of the opinion that she has exceeded all of her Key Performance Indicators for the previous year.
- Maurice is an accountant at a small accounting practice. His contract says that he may be entitled to an annual bonus of $5,000, depending on the cash flow of the practice and the number of clients he introduced to the practice in the previous year.
Executive employment contracts may also contain conditional payments such as bonuses paid after you have completed a specified number of years’ service. They differ from discretionary payments in that the employer’s liability to pay them is triggered as soon as the particular condition is satisfied.
How can we help with your executive employment contract?
We can help you to review your contract by:
- Providing advice on the meaning and potential operation of the clauses in your employment contract.
- Assisting you to negotiate amendments to your employment contract.
- Advising on the effect of post-employment restraints after you have resigned from your employment.
Whether you’re an executive employee recently recruited by a new business, or a former executive looking to make the next step in your career, we’re here to help. Please get in touch to let us know how we can help you to get the most out of your executive employment contract.