You may think you know the answer to this question, but do you really?
There are a variety of employment agreements used to cover the working arrangements and conditions of employees.
One of these is a common law contract between the organisation and the individual that summarises the key elements of the employment arrangement.
Common law contracts are typically used for middle, senior and executive management roles where the roles have points of uniqueness and where there are relatively few people doing the same role. These types of agreements allow organisations to reflect remuneration and other differences, from role to role.
We’ve noticed something of concern with these types of agreements, in the process of conducting hiring assignments for aged and community providers.
We’ve seen a number of organisations carrying parts of their enterprise agreements into their senior management common law contracts, unintentionally creating business exposure.
This has most commonly been in contracts for senior roles such as Regional Manager, where the person is overseeing multiple services.
The contract specifies unique details such as salary, car and study support but defers to the organisation’s enterprise agreement for other matters such as leave entitlements and notice periods.
Enterprise agreements are usually designed for staff who fill volume, frontline roles where replacements are relatively easy to find. As such, they often allow staff to give just 1 week’s notice in the first year of employment and not much more than this for the next couple of years.
When such an enterprise agreement clause is carried into the contract of a role such as a Regional Manager, who has influence over a big chunk of business, you now have a serious business exposure. You’ve just given the person the ability to get up and leave you in the lurch, and this has all come about by default – nothing intentional about it at all.
This process failure arises because most of an organisation’s hiring is done under an enterprise agreement and not under common law contracts. The latter is used less often and pulled together quickly, without pause to consider the business’ needs in relation to the specific role.
We’ve seen this quite a few times now – not quite systemic, but certainly more often than we’d like to see!
So, here are two things we recommend you do.
1. Undertake a detailed review of your middle, senior and executive management pro forma employment contracts to ensure they support your business needs.
2. Develop a simple process :
– That allows the hiring manager to give input on the relevant elements
(notice period is a critical one)
– Prepare the draft agreement using a checklist to ensure key contract variables have been addressed before issuing.
Take these very simple steps to avoid business heartache!