What is an Executive Employment Agrement?
An Executive Employment Agreement is a contract which is used to formalise your employment arrangement with an executive joining your company.
The main purposes of this contract are to:
🔸 cover the terms and conditions of employment
🔸 provide clarity to both the employer and employee about their rights and obligations
🔸 facilitate executive performance (including KPIs to encourage improved or higher performance)
🔸 Protect the legal interests of both parties, particularly in the termination of employment
What does this Executive Employment Agreement include?
Our Executive Employmnent Agreement template covers all of the important terms you need:
★ Duties and Responsibilities
★ Compliance with policy and procedures
★ Leave Entitlements
★ Intellectual Property
★ Conflict of Interest
★ Restraint of trade
★ Dispute Resolution
★ Job Description
What is an executive employee?
An executive empoyee is anyone hired in a senior position at your company. This includes Directors, CEOs, CFOs, CIOs, General Managers and Senior Managers.
They generally have more responsibility and accountability than normal employees, and are responsible for managing a team or business function.
Do I need a contract?
Yes, absolutely! A contract protects both the employer and employee.
An employment contract will help to set the ground rules in black and white so everyone is clear on their obligations and how everything will work. You need a proper written contract to enforce your rights and make sure your business is legally protected in case something goes wrong.
Does this contract include a restraint clause?
Yes, it does.
A restraint of trade clause helps to protect your business interests. It prevents the ex-employee from soliciting or approaching your employees, contractors, clients and customers after they have ceased employment with your company.
Keep in mind that restraints of trade are only enforceable if you can prove that the restraint is necessary to protect your 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 you primarily operate.
Negotiating an Executive Employment agreement
It’s very common for executives to negotiate the terms of a contract before they accept a new role. Don’t be surprised if you receive a request to make some changes to the terms of the Employment Agreement.
As a company, you can make a commercial decision about any changes you will accept or not accept.
Common items which can be negotiated include:
🔹 Remuneration – including annual salary, bonuses and other entitlements
🔹 Leave entitlements – including annual leave, long service leave and parental leave
🔹 Notice period – required notice period for the employer or employee before terminating the agreement
🔹 Restraint of Trade – length of time, geographical area, any exemptions etc
🔹 Key Performance Indicators – any targets or KPIs which are set, and how they affect commissions or bonuses
🔹 Termination Payments – including share options or lump sum amounts
Are there any other names for an Executive Employment Agreement?
Yes, you might have also heard this contract referred to as an Executive Employment Contract, Senior Executive Employment Agreement, Directors Employment Agreement or CEO Employment Agreement.
All of them are basically the same thing, just different names for the contract you use with your executives employees.
We recommend that you consult the Fair Work website to read up on the National Employment Standards (NES) before you use this template.
Senior managers and executives are unlikely to be covered by any award or enterprise agreement, but they are still covered by the National Employment Standards.
These 10 standards relate to maximum hours of work, annual leave, personal leave, parental leave, flexible working arrangements, community service leave, long service leave, public holidays, notice/redundancy and the requirement that you be given a Fair Work Information Statement.
You can view a handy guide to hiring new employees HERE