Councils must responsibly manage employees and external contracting staff and ensure that all relevant human resources procedures and policies are in place and adhered to. Effective human resources management is fundamental to any organisation’s operation but is particularly important for councils as a publicly-funded employer and even more so in regional areas as a major employer.
The successful management of human resources is key to supporting a harmonious and productive workforce. Successful management includes adherence to legislative requirements when contracting senior staff, providing staff with suitable employment arrangements and the provision of consistent and timely staff performance reviews.
At the time of this examination, council had five senior officers. One officer is employed on an acting basis for a fixed term of 12 months. The other four have been employed on a fixed term contract for a period not exceeding five years. However, the role and duties of one senior officer did not meet the definition of a senior officer under the Act.
A very concerning feature of the contracts involved the terms relating to separation payments provided to four senior officers. Each of these contracts provided for six months’ notice or in the absence of notice, payment in lieu.
If the contract expired before the six month notice period, employees would receive the balance of the contract period unless a dismissible offence occurred. Where terminated in this manner or upon expiry without the CEO offering a new contract or redundancy, senior officers are also entitled to three weeks’ pay for each year of service with the council plus $10,000 tax free – an unprecedented concession in Victorian local government. The potential termination payments to the four senior officers ranged from $166,000 up to $416,000.
These conditions are far in excess of what are considered reasonable industry employment separation conditions. The potential financial risk for council is considerable: if all four employees had been terminated, the estimated payout (as of 1 June 2019) would have been $1.28 million or 10.49% of council’s rate revenue (which totals $12.18 million). In addition to this separation payment, the departing senior officer would receive a payout for other entitlements such as any remaining long service leave and annual leave.
There was no documentation provided as to how these arrangements were created but the former CEO was responsible for ensuring senior officer contracts followed the legislation and met industry standards and community expectations. When the former CEO was asked about the senior officer contract terms, he did not offer an explanation for the terms and believed he may have “inherited them” from previous contracts. He could not recollect whether he had questioned the provisions.
- Review all senior officer contracts with immediate effect in accordance with relevant legislation.
- Align all future senior officer contracts with legislative requirements and industry standards.
The Inspectorate received initial allegations related to staff and secondary employment practices and found further evidence in the course of the investigation.
The key allegations included:
- a staff member having a private business and conducting work for council
- a staff member contracted to clean a council facility in addition to their main role
- staff members undertaking other work outside their council duties and using council equipment
The Inspectorate established that these secondary employment practices were occurring.
While staff members engaging in secondary employment is an acceptable practice, there is a potential risk to council and a lack of accountability if there is no secondary employment policy governing these matters. The examples highlighted also demonstrate the potential for conflicts of interest to occur.
- Develop and implement a secondary employment policy to ensure accountability and transparency.