I have been invited to speak today on developments in executive employment contract law, and particularly on the issue of damages awards in litigation. I will cover the very important Nikolich litigation, but I would also like to reflect on Walker v Citigroup Global Markets Australia Pty Limited (formerly known as Salomon Smith Barney Australia Securities Pty Limited) and some of the implications of that litigation for claims by executives against their employers.
Both of these cases demonstrate important developments in executive litigation in recent years. The developments I would like to highlight in this paper are: First – that the Trade Practice Act 1974 (Cth) is proving particularly important in executive contract litigation. Second – the courts are taking a flexible (and, with respect, entirely sensible) approach to the construction of employment contracts when there is a difference between the wording of a standard form service contract and specific terms agreed during negotiations. Construction of terms concerning the duration of contracts has a significant impact on the size of damages claims. Thirdly – damages are being awarded for loss of chance, according to the principles in Commonwealth of Australia v Amann Aviation Pty Ltd. This development also has the potential to inflate damages claims. Finally – damages are being awarded for what we might describe as personal distress, so long as that distress results in some significant disturbance to the claimant’s health or lifestyle.
The cumulative effect of these developments is that we are seeing executive level employees receiving damages awards considerably higher than they would receive if they were limited to a simple payout for a notice period, and certainly higher than the statutory compensation allowed under unfair dismissal laws. The executive cases are proving that contract-based claims and claims under the Trade Practices Act can produce considerably more generous awards than statutory claims under industrial laws.
Labor and Employment Law
Date of this Version
Joellen Riley, "Damages in Executive Employment Litigation" (July 2007). University of New South Wales Faculty of Law Research Series. Working Paper 52.