Executive's termination benefits did not carry-over to new contract

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Executive's termination benefits did not carry-over to new contract

The NSW Supreme Court has found that a term in an executive’s contract providing for a large payment on termination of employment did not carry-over to the new contract formed when the original employer left the business.

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10/03

 

The NSW Supreme Court has found that a term in an executive’s contract providing for a large payment on termination of employment did not carry-over to the new contract formed when the original employer left the business.

The executive was engaged by a United States corporation to manage a pay television business. His employment contract provided a very substantial termination benefit. The original contract provided for a $5.4 million termination payout. Control of the business changed and the United States corporation ultimately had no further interest in the business.

The executive continued to work in the business but there was no express or oral employment contract with subsequent employer. The new employer argued that it had no knowledge of the termination benefit in the former contract with the United States corporation.

Justice Palmer found that the former contract, including termination benefit provision, was not 'assigned' to new employer. He also found that the new contract made with new employer did not by implication incorporate all the terms of the former contract, including the termination benefit.

There was a new contract in issue and there was no evidence that the generous termination provision formed part of that contract.

See: Dodds v Premier Sports Australia Pty Ltd & Ors [2003] NSWSC 948 - Palmer J - 24 October 2003.

 

 

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