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Last week we sent a Newsletter to clubs reminding secretaries and directors that they can be personally liable for a penalty of up to $11,000.00 if the club itself contravenes an “offence provision” of the Accountability Code.

In response we have had a number of questions about the Accountability Code including a club’s obligations in relation to the employment of “top executives” under the Accountability Code.

What has changed for top executives?

Last year’s amendments to the Registered Clubs Act (“Act”) introduced the Accountability Code (which is now Schedule 2 to the Registered Clubs Act). This amendment also changed the definition of a “top executive”.

Importantly, clause 3 of the Accountability Code introduced a new obligation to require clubs to engage all top executives on written employment agreements which have been reviewed by an independent and qualified advisor. These written agreements must also be approved by the board of the Club.

While a breach of this obligation is first referred to the Code Authority, any breach of the Accountability Code can result in disciplinary action under part 6A of the Act.

So who is a top executive?

A “top executive” of a registered club now means any of the following:

  • the secretary of the club;
  • a manager of the club;
  • any employee of the club who is nominated by the club as a top executive; or
  • any employee of the club (other than a person referred to in paragraphs (a)–(c)):
    • who is one of the 5 highest paid employees of the club;
    • whose remuneration package exceeds the high income threshold; and
    • who is involved in the general administration of the club or with its liquor and gaming operations.

The reference to a “manager” is a reference to a person appointed under section 66 of the Liquor Act (not just a bar manager or duty manager).

The high income threshold set by the Fair Work Commission under the Fair Work Act 2009 is currently $145,400 per annum but changes on or with effect from 1st July in each year.

This is a significant change to the definition of a top executive as one of the previous definitions in the Act had only required a top executive to be one of the 5 highest paid employees regardless of the amount they earned.

However, it is important to note that a secretary or approved manager (or any person nominated by the club as a top executive) will still be a top executive even if they earn under $145,400.

So what does a club need to do when employing a “top executive”?

Section 3 of the Code states:

  • A registered club must ensure that each top executive of the club enters into a contract of employment in writing with the club that deals with the following:
  • terms of employment,
  • the role and responsibilities of the top executive,
  • remuneration (including fees for service),
  • termination of employment.
    • A contract of employment with a top executive does not have effect unless it is first approved by the board of the club.
    • A contract of employment must be reviewed by an independent and qualified adviser before it may be approved by the board.

Who is an “independent and qualified adviser”?

Liquor & Gaming NSW has produced a guideline (Guideline) which provides that section 3(3) refers to an independent and qualified review by a suitable person with legal or human resources (HR) qualifications. The Guideline makes clear that a club’s own HR personnel are not independent advisers.

In our view, it is clear that any person who is reviewing an employment agreement should be engaged by the club. That is, it would not be appropriate for a board to rely on the advice of an “employee body” (such as a union) which by its very nature is required to promote the interests of members who are employees of clubs.

What about top executives currently working at the club?

An interesting issue is, how does the Accountability Code apply to existing top executives who are employed by the Club (and may have been for many years) but are not covered by a written employment agreement?

The wording of section 3(1) the Accountability Code is straight forward “A registered club must ensure that each top executive of the club enters into a contract of employment in writing…”.

That is, the wording of section 3(1) of the Accountability Code is not limited to when an employee first starts working at a club.

However, an employer does not have the ability to simply force a current employee to enter into a written contract of employment (which may change the terms of their employment).

In our experience, most top executives will have a written contract, such as a letter of appointment or formal agreement.

If a top executive does not currently have a written employment contract, this new requirement can be a useful opportunity to meet with the top executive, discuss any issues and endeavor to record the terms in writing so that there is certainty about those terms, for both the club and top executives.

As with all employment law matters, negotiations and discussions should be handled sensitively and with the benefit of expert advice.

What about a variation to an employment agreement?

Another interesting issue that arises is at what stage does a variation of a top executive’s employment require his/her written employment agreement to be reviewed by an independent adviser and approved by the board of the Club?

This is not dealt with in the Accountability Code. In our view, it will vary on a case by case basis.

In our view, any variation to a top executive’s employment agreement should be approved by the board of the club. A club should seek advice as to whether a proposed variation requires review by an independent and qualified adviser.

Benefits of a Model Contract of employment

The obligation to ensure that a club seeks advice when employing each top executive is potentially a significant increase in compliance costs for clubs.

Sensibly, the Guideline provides that a club may use a “model contract of employment” (Model Contract) if that model contract has been reviewed by an independent and qualified advisor.

How can we help?

In our experience, many club boards already understand the importance and benefits of seeking expert advice when engaging (or updating an agreement with) the secretary or chief executive officer of the Club.

However, we are also able to provide a Model Contract that can be used by a club to engage its top executives and a standard letter of advice for the board which “reviews” the Model Contract.

Our clubs employment team also regularly prepares and reviews tailor made employment agreements for secretaries/chief executive officers and other top executives when required.

Further Information and Contact Details

For advice on your club’s obligations under the Accountability Code or model contracts of employment with top executives please contact any member of the Clubs team on 8251 7777 or by email:

John Ralston:j.ralston@pigott.com.au
Bruce Gotterson:b.gotterson@pigott.com.au
Ray Travers:r.travers@pigott.com.au
Michael McCluskey:m.mccluskey@pigott.com.au
Matt Goodwin:m.goodwin@pigott.com.au

 

This Newsletter is produced by Pigott Stinson. It is intended to provide general information only. The contents of this Newsletter do not constitute legal advice and should not be relied upon as legal advice. Formal legal advice should be sought from us in respect of the matters set out in this Newsletter. Liability limited by a scheme approved under Professional Standards Legislation.