The contract

Context

While the use of the contract is not mandatory, it is strongly encouraged to ensure consistency with government policies. The contract has been drafted with clauses in bold reflecting core terms and conditions which are mandated by the PEER policy.

The standard contract consists of:

• the body, which includes the standard terms and conditions which apply to all VPS executives
• four schedules, which are tailored to an executive’s role and employment, including:
  • Schedule A: the position, duties and workplace location
  • Schedule B: the remuneration package
  • Schedule C: superannuation
  • Schedule D: detailed leave provisions

Executive contracts for executives employed in public entities are required to include the following mandatory contractual terms and conditions under the PEER Policy:

• contract of employment to be offered for a maximum term of up to five years
• TRP includes base salary, superannuation contributions, employment benefits (i.e. non-salary) and the annual cost to the employer of providing the non-monetary benefits, including any fringe benefits tax payable
• termination of contract provisions – the employer may terminate a contract by providing the executive with four months’ notice in writing
• no compensation for termination of a contract beyond payment in lieu of notice and accrued leave
• an unexpired portion of a contract may only be paid out in exceptional circumstances, with the written consent of the relevant department Secretary capped bonus opportunity for executives employed on or before 3 February 2020 (see below).

About the contract

Entire agreement

The contract constitutes the entire agreement between the parties. This Handbook does not create any additional legal rights or obligations. The contract prevails to the extent of any inconsistencies.

The contract is signed by the employer and executive. Only an individual can enter into an employment contract. An executive cannot be paid via a private company.

Variations

The contract may be varied at any time upon written agreement between the executive and employer. Variations may be made to reflect minor to moderate changes to an existing role’s duties and responsibilities, or the executive’s remuneration or other entitlements.

In the event of more significant changes, parties may instead agree to enter into a new contract.

Contract length

The term length of an executive contract is limited to five years under the PEER Policy.

Parties may renew or extend the contract. Although there is no limit on the number of extensions, each total contract length must not exceed 5 years.

Renewals

The renewal of a contract should be decided before the existing contract expires.

Under clause 14 of the contract, an executive should be consulted at least 6 months before expiry (or 3 months if the contract length is one year or less), and the renewal decision must be made no later than 4 months before expiry (2 months if the contract length is one year or less). While the contract does not make these requirements mandatory, it is expected that employers will have processes in place to ensure these timeframes are met. They should only be departed from in exceptional circumstances.

There is no limit to the number of times an employer and an executive can renew a contract.

There is no probation period under the contract.

Interaction with the Fair Work Act 2009

The Fair Work (Commonwealth Powers) Act 2009 (Vic) excludes VPS executives and persons “employed at higher managerial levels in the public sector” from the referral of industrial relations powers to the Commonwealth. The Commonwealth does not have the power to make laws with respect to the employment of this cohort, which may include public entity executives, and they are generally not subject to requirements under the Fair Work Act 2009 (FW Act).

To encourage mobility between executive and non-executive roles, many of the terms and conditions which apply to non-executive public entity employees by virtue of their coverage under the FW Act should be applied to executives under the contract.