It is a reminder of the pitfalls of email communication, the importance of flexibly written executive contracts and what constitutes the right of an employee to regard the conduct of his/her employer as bringing the employment to an end.

Paul Fishlock was employed as ‘chairman executive creative director’ under an executive contract that had neither a clause that enabled the duties or the position to be altered reasonably over time, nor one which set out the actual duties to be performed in that role. For about seven years he performed this role.

In May 2010 a potential candidate, Reed Collins, came to the attention of the global head of Young & Rubicam, then parent of The Campaign Palace. From that time on it appeared that the agency eagerly sought to recruit the candidate seeing that he had potential to lift the company’s performance.

While aware that the appointment of Collins would create conflict about the leadership of creative at the company, nevertheless it went ahead and appointed him national chief creative officer.

The company’s leadership knew it would be a mess and it proved to be. It told Fishlock that Collins would be charged with the ultimate creative responsibility over both Palace offices, thereby signalling to Fishlock that his position was under considerable challenge.

Being pushed out

Sure enough, Fishlock’s lawyers sent a letter of demand to the company in which it asserted that the company’s conduct in appointing Collins constituted a wrongful repudiation of the employment and its client accepted the repudiation.

It seemed evident that in a none-too-subtle way Fishlock was pushed out. Yet the company argued that Fishlock was not necessarily the most senior creative director in the company.

This argument was helped by the fact that there was no job description attached to his contract. But the court was able to determine that was the case, and that therefore the appointment of Collins was a fundamental breach of his contract.

There was no provision in the contract, as in many which are recommended for executive employment today. It simply appointed Fishlock as the ‘chairman executive creative director’ and there was no place for any other position or duties into which he could be placed.

For some senior positions, such as CEO, this flexibility is not possible. If the company had not intended that this was the most senior position, or that the position might change in scope, then it should have provided so in the contract.

Another fatal element was email communication, which clearly disclosed that the company realised that the appointment of Collins would have significant implications for Fishlock. These emails disclosed that what was being said to Fishlock to his face was not quite what was being said about him in emails, a not uncommon situation.

The problem is that emails are communications that might be used in legal proceedings, if they are relevant. That the company had sought to consider not dismissing Fishlock immediately upon the appointment of Collins, until the latter had settled in, increased the damages that were ultimately awarded to the plaintiff; a period of time was added to the damages to determine how long he would have been employed for if he had not quit.

When will it end?

It can be difficult to determine what warrants an employee regarding their employment is at an end because of the employer’s conduct. In this case Fishlock’s lawyers rightly concluded that he was, contrary to the fundamental terms of his contract, replaced by Collins and that was a repudiation of the contract. It will not always be so clear.

Fishlock’s executive contract contained a number of post-employment restraints, which the court considered were reasonable and went no further than were necessary in order to reasonably protect the interests of the Campaign Palace.

However, because the company had breached the contract, Fishlock was no longer bound by those post-employment restraints. And although he was not entitled to long-service leave if he had resigned, because the court held that his employment had been effectively terminated, he became entitled to pro-rata long-service leave under New South Wales law.

Accordingly Fishlock was awarded nine months’ pay amounting to $268,000 plus pro-rata long-service leave.

Lessons for employment contracts are:

• Allow for changes that may occur during the life of the employment contract to avoid misunderstandings.
• Ensure that post-employment restraints are reasonable and therefore enforceable.
• Email communication is a gift for
hungry lawyers. Emails are often quickly dispatched without enough thought but then become vital elements of a case. The author will have to explain that he/she did not mean exactly what the words appear to be saying and it is not much fun doing that in a witness box.