Posted on May 25, 2022 by Ming Gu and Lindsay Taylor

OLG Circular: Proposed Amendments to the Standard Contract of Employment for Local Council General Managers

On 17 May 2022, the Office of Local Government (‘OLG‘) issued Circular No. 22-12 (‘Circular‘) in response to recommendations made by the Independent Commission Against Corruption (‘ICAC‘) as a result of its investigation of the former Canterbury City Council (‘Operation Dasha‘).

In its Report published in March 2021, the ICAC concluded that the corrupt conduct exposed in Operation Dasha was facilitated by, among other things, the ‘no fault’ termination provision in the Standard Contract of Employment for General Managers of Local Councils in New South Wales published by the former Department of Local Government in 2006 (‘Standard Contract‘).

The Local Government Act 1993 (NSW) (‘LG Act‘) requires the general manager of a council to be employed under a performance-based contract (see s338(1)), and provides that the Chief Executive of the OLG may, by order in writing, approve one or more standard forms of contract for the employment of the general manager of a council (see s338(4)).

Once approved, a council must employ its general manager under such a standard form of contract (see s338(6)). However, the approval, amendment or substitution of a standard form of contract does not affect any existing employment contract between a council and its general manager (see s338(8)) until an existing contract is renewed or a new contract is to be entered into (see s338(9)).

The ‘no fault’ termination provision currently can be found in clause 10.3.5 of the Standard Contract, which provides that this contract may be terminated before the termination date by way of a council giving 38 weeks’ written notice to its general manager, or alternatively, by termination payment under clause 11.3.

The ICAC recommended a review of clause 10.3.5, which should canvass options such as introducing a requirement of a two-thirds or an absolute majority vote of a council, or the availability of mediation, in the ‘no fault’ termination provision.

The OLG undertook the review of the Standard Contract recommended by the ICAC in consultation with the parties to the Local Government (State) Award 2020, and has published a draft new Standard Contract incorporating its proposed amendments (‘Draft 2022 Standard Contract‘).

In summary, the OLG proposes the following amendments to clauses 10.3 and 17.3(a) of the Standard Contract, which appear in the Draft 2022 Standard Contract:

  • Before a council terminates its general manager’s employment following a performance review concluding that the general manager has not substantially met the performance criteria or the terms of the performance agreement, the council must further afford the general manager a reasonable opportunity to utilise the dispute resolution procedures outlined in clause 17 of the Standard Contract (see the proposed sub-paragraph iii of clause 10.3.1(d)).
  • When a council intends to terminate its general manager’s employment utilising the no fault termination provision, re-numbered as clause 10.3.1(e):
    • the council must give its reasons in writing for the intended termination if the general manager requests that reasons be given (see the proposed clause 10.3.2),
    • the council and the general manager may participate in mediation under clause 17 in relation to the council’s intention to terminate under clause 10.3.1(e), if either party requests it and both parties agree to it (see the proposed clause 10.3.3),
    • the council must give reasons in writing upon the general manager’s request if it does not agree to participate in mediation with the general manager under clause 10.3.3 (see the proposed clause 10.3.4), and
    • a mediator may be agreed in advance between the council and the general manager when the employment contract is made (see the proposed amendment to clause 17.3(a)).

Further, the OLG proposes to add ‘serious or persistent breach of the code of conduct’ as a ground for summary dismissal to terminate a general manager’s employment contract at any time and without notice under clause 10.4 (see the proposed new paragraph (e) of clause 10.4.1).

The OLG has now opened the consultation phase to invite submissions from local councils in relation to the Draft 2022 Standard Contract before it is approved by the Departmental Chief Executive under s338(4) of the LG Act.

A copy of the Circular can be found via this link.

A copy of the ICAC’s report on Operation Dasha can be found via this link.

A copy of the Draft 2022 Standard Contract can be found via this link.

If you want to discuss the issues raised in this post, please leave a comment below or contact Dr Lindsay Taylor on 02 8235 9701.