Norman Waterhouse
   
Norman Waterhouse

CEO Employment Alert – The far-reaching implications of Barunga West v Hand

On 6 August 2014, the Full Court of the South Australian Supreme Court (the Court) delivered its decision in District Council of Barunga West v Hand [2014] SASCFC 90 (the Decision). The decision concerned the employment of a South Australian local government Chief Executive Officer (CEO).

While various issues were covered by the Decision, one particular finding stands out and must be understood by all Councils, CEOs, Senior Managers, and human resources professionals within the South Australian local government sector. Specifically, the Court held that the employment of a CEO is not covered by the South Australian Municipal Salaried Officers’ Award (SAMSO Award). This is contrary to the position that has been applied throughout the sector for some decades.

The Decision

Upon finding that CEOs are not covered by the SAMSO Award, the Court consequently found that the termination on notice provisions in the SAMSO Award could not be applied to the termination of Mr Hand’s employment. Due to the non-applicability of these provisions, Mr Hand (who had no written contract and therefore no express agreement with the Council regarding notice of termination) was entitled to ‘reasonable notice’ of termination. In the circumstances, the Court found that a period of 12 months was ‘reasonable notice’. For more on the principle of ‘reasonable notice’, see our earlier briefly article on the subject.

The broader implications for Councils and CEOs

The general exclusion of CEOs from the SAMSO Award means that the rights and obligations provided by the SAMSO Award in respect of the employment of local government officers do not apply in respect of a CEO’s employment with a Council. Furthermore, any Council enterprise agreement that is expressed simply to apply to employees covered by the SAMSO Award will not cover the CEO.

Another consequence of the exclusion of CEOs from the coverage of the SAMSO Award is that CEOs are now ‘non-award employees’ for the purposes of unfair dismissal pursuant to the Fair Work Act 1994 (SA) (except where the CEO is validly covered by an enterprise agreement). Accordingly, if a CEO is earning over $126,532 per annum (this figure is indexed annually) immediately before termination of employment, she or he does not have access to the State unfair dismissal jurisdiction.

Employment contracts may need to be reviewed if they were negotiated on the presumption that the CEO was covered by the SAMSO Award. Additionally, enterprise agreements purporting to cover the CEO based upon this same presumption will need to be reinterpreted.

We would be happy to provide advice on these issues, and will continue to keep you informed of any further pertinent developments on this subject.

For more specific information on any of the material contained in this article please contact Sathish Dasan on 8210 1253 or sdasan@normans.com.au.


 

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