We still hate term contracts for senior staff

The scales of justice symbolise the importance of a balance between opponents in courts - the process is meant to be fair and even-handed.

But the least fair and least even-handed employment arrangements in local government operate under the standard contract legislatively enforced on councils to employ their general manager and senior staff.

This isn’t just an issue affecting a GM and directors, because if there’s no fairness available in their employment relationships, what hope is there to expect they behave fairly to their own staff? While the Award has fairly strict requirements about disciplinary processes and performance management, Award employees also have the safety net of access to the Industrial Relations Commission.

There is a long and sad history of the introduction of term contracts in councils. Initially seized upon as a way of getting rid of people easily without having to be fair or reasonable, the Institute of Municipal Management (the precursor to the Local Government Managers/Local Government Professionals, or whatever they’re called these days) encouraged the rot with a discussion paper arguing it separated out executive staff from the rest. And then they developed their own model contract, a flawed and contradictory document that earned them a special award from us way, way back, in August 1995.

The 1993 Local Government Act introduced the requirement for senior staff to be employed on a fixed term. We fought vigorously at the time, we argued it constantly and in the Five Year Review of the Act, the Minister for Local Government at the time, the much-loved Ernie Page, agreed with our concerns. In a letter to those who had participated in the review dated 6 October 1998 he said this:

It was submitted as part of the review that in some cases over the past five years, councils have used the fixed-term nature of employment contracts for senior staff as a tool for terminating individual staff, rather than using a more appropriate performance management system. This gives rise to concerns about the ability of council staff to maintain their independence and give professional opinions about Council matters as the end of their fixed-term draws nearer.

It is therefore recommended that senior staff should continue to be employed on contract, but that the nature of those contracts should be open-ended rather than fixed.

Sadly that recommendation to Cabinet was defeated, senior staff remain employed on term contracts and, as vividly demonstrated last week in concluding what had been a long-running farce at Parramatta City, Kunc J in the Supreme Court emphasised:

“the Council has a right to terminate without cause by giving the written notice or by making the termination payment under subclause 11.3... In any event, clause 10.3.5 again provides a complete answer because under clause 10.3.5 the Council can terminate the Contract without cause.”

And that, is the fundamental unfairness that allows a Council to terminate the employment arrangement without cause, and in turn allows a GM to do similarly to other senior staff.

It’s not good enough. While members of the SES in the State public sector have been transitioning away from term contracts into permanent employment now for four or more years, the OLG, responsible for the management of the Local Government Act, have sat on their hands and made a few minor changes, but remain committed to the capacity to terminate the contract “without cause”. Or Local Government Ministers have made them sit on their hands (a position they must find increasingly uncomfortable) but it’s hard to know.

The OLG managed a Working Party to review the GM and Senior Officers standard contracts way back in 2012, but there are still no protections, no mandatory mediation before termination for example, and still the 38 weeks’ payment without cause continues.

There was some disagreement between LGNSW and the unions, and also with Local Government Managers (or whatever they’re called these days) about appropriate termination and penalty arrangements. There is now a brand-new board of young bloods in LGMA, I wonder what they think about complying with the standard contract and unfairly terminating it? We’ll ask them.

This will be something for us to start pursuing again if there is a change of government in NSW after 23 March. But even if there isn’t a change, something needs to be done.

It is entirely possible for a Council to breach its obligations to conduct performance reviews, provide proper performance feedback to a GM, and any number of other provisions within the standard contract and then terminate without cause and get away with it. And similarly, it’s entirely possible for a GM to do that to a member of their senior staff. It’s a shortcut for the lazy.

When the GM at Mid-Western sacked two of the directors without cause, including a member of ours, back in 2016, we took action for that member under section 106 Unfair Contracts of the Industrial Relations Act which allowed us to settle. But the capacity to sack people without good reason remains.

In 2005, Haylen J in the IRC in Paparo v Moree Plains Shire Council found that the Unfair Contracts jurisdiction was available to local government senior staff, and that included the power of the Court to vary unfair contracts to make them fairer and to provide compensation beyond that provided in the standard contract.

Now with the separation of the IRC and the removal of the more judicial roles to the Supreme Court, section 106 Unfair Contracts run in the Supreme Court, a costs jurisdiction which will make councils and GM’s work harder to avoid what Ernie Page described as looking like they’re using “a tool for terminating individual staff... giving rise to concerns about the ability of Council staff to maintain their independence and give professional opinions about Council matters”.

It’s hard not to speculate that there are some shoddy terminations going on, where there is clear evidence that a GM, for example, has been guilty of multiple breaches of the senior staff contract for someone reporting to them, creating multiple layers of unfairness and then, clearing the deck, without cause by paying 38 weeks. The only prerequisite to that being section 337 of the Local Government Act, which requires the GM to consult with the Council prior to the termination.

And it would be a foolhardy GM who didn’t do that. Wouldn’t it.

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