For the Executive: What to do When You’ve Been Dismissed

What should you do if you’ve been dismissed from your executive job?

You are (or were) an executive or senior staff member. Your employer has unceremoniously shown you the door. Maybe they’ve asked you to sign a deed, or perhaps they are about to.

Either way, what do you – the former executive – do?

This article explores the options open to executives and senior staff in Australia who are (or are about to be) dismissed from their employment.

Author: Farrah Motley, Director of Prosper Law and an executive employment lawyer.

1. “The writing is on the wall”

Sometimes, it may become apparent to an executive that their employer is looking to ‘make a move’ long before the guillotine falls.

If you have noticed that invitations to meetings have become less frequent, your direct report(s) seem to have more knowledge of key business matters than you, your decision-making powers have been dashed or some other fishy activity – this should be a red flag. If you want to learn about some more things which may point to an impending termination of your employment, you read this article from the Huffington Post.

At this point, preparation is key. Those conversations that may seem innocuous – write a diary note about them. Those emails that may seem to hint at issues regarding your executive role or responsibilities – print them. Those job boards that seem to be advertising for a role with eerily similar duties to yours (albeit with a different job title) – save them.

All of these things may serve you well as evidence later down the track. If you have any concerns, you should be proactive and talk to an executive employment lawyer.

2. Do not sign anything or comment in writing

Don’t sign anything or provide any written comments to your employer. At least, not until you have spoken to an executive employment lawyer.

There are a few reasons for this. Firstly, being dismissed from a role you gave your heart and soul to can be emotional (to say the least!) and you may say things you will later come to regret. Secondly, you may inadvertently impact any legal claim you may later wish to bring, with disastrous consequences.

My tip? Play it cool. Ask questions, but don’t answer them.

If you can, write the answers down or follow up and confirm with your employer what they said to you in the meeting. Contemporaneous notes (that is, a record written around the time of an event) can be worth their weight in gold. This is particularly the case where the notes were shared and went unchallenged, and later any dispute with your employer becomes a ‘he said’ / ‘she said’ scenario.

3. Dust off your executive employment agreement

If you were considered a high-income earner, your employment contract becomes ever more important. This is because if you earned over the high-income threshold, you do not have the benefit of unfair dismissal protections under the Fair Work Act 2009 (Cth).

Depending on the reasons for your dismissal and the way in which your employer went about the dismissal, you may seek to bring a claim for breach of your executive employment contract.

There are a number of clauses that are particularly important in executive employment contracts when it comes to dismissal, including:

1. restraint of trade clauses;
2. bonus entitlements, deferred payments and severance clauses;
3. non-solicitation clauses; and
4. notice clauses.

Now let’s look at each of these clauses and why they become important in the context of an employer dismissing an executive employee.

Restraint of Trade Clauses

Restraint of trade clauses are notoriously difficult to enforce. But that doesn’t mean they are not enforceable.

If you are an executive with a restraint of trade clause in your employment contract, you need to tread carefully. If you can fly under the radar until (preferably) the longest restraint period has ended, you can avoid an argument with your (former) employer altogether.

If, however, you need to market yourself or your prospective business and want or need to act contrary to the clause, you may need to talk to an employment lawyer.

Bonuses, Deferred Payments and Severance Clauses

If your employer has decided to pull the pin, you should check what the triggers are for any bonus entitlements, deferred payments (particularly if you came as part of a business purchase agreement package) and severance clauses.

These types of payments can make a huge difference to your final payout figure and can even be a powerful bargaining tool.

Non-solicitation Clauses

If you were employed for a significant length of time (and/or you were just that good at your job!) then you are likely to have developed close business ties with your employer’s clients. Be careful though, because this is likely to be a key driver for your employer wanting to enforce a restraint of trade clause.

Losing clients and customers to former employees is never a good look. Not only is it embarrassing for a business, but also conveys a chink in the corporate armour (both internally and externally).

Notice Clauses

Notice clauses in employment agreements set out how each party can give notice to the other party. In the context of executive employment agreements, notice clauses will describe how much notice either party must give the other party to terminate the agreement.

Because of the importance of senior roles to a business, the notice period can range from 1 month to 12 months! For the employer, a long notice period can be a double-edged sword. A long notice period can give an employer comfort that they will have enough time to find a replacement, but it increases the potential payout figure when trying to exit an executive from the business.

If your employer doesn’t comply with the notice clauses, they may be in breach of your executive employment agreement. This provides you with a powerful bargaining tool.

4. Consider your options

If you prefer the ‘all guns blazing’ approach, you may choose to bring a claim against your employer for:

1. adverse action; or
2. breach of contract.

Not everyone wants their dismissal to be as public as ex-Australia Post CEO, Christine Holgate. If that’s not your style or you want to minimise the personal toll of any potential legal action, you can seek to pursue an out-of-court settlement.

Often, your employer will be the one seeking to keep your dismissal and any legal fallout ‘on the down-low’.

5. Seek legal advice

Let me say it again – seek legal advice! Employment law issues are very rarely straightforward. You need to make sure you have a qualified and experienced employment lawyer in your corner.

Time is of the essence, so it’s important to seek legal advice and seek it fast.

Luckily, we’re here to help! We can provide legal advice for executives.

Farrah Motley | Director

PROSPER LAW – Australia’s Online Law Firm

M: 1300 003 077

E: farrah@prosperlaw.com.au

W: www.prosperlaw.com.au

A: Suite No. 99, Level 18, 324 Queen Street, Brisbane, Queensland Australia 4000