Former CFO awarded $1.1 million in damages based on unsigned employment contract

By Fay Calderone and Rhea Karunakar

The NSW Supreme Court, in Roderick v Washington H Soul Pattinson & Company Limited (No 2) [2020] NSWSC 1224 has awarded $1.1 million in damages to a former CFO. The Court found the absence of a signed employment contract did not affect the assessment of the employee’s entitlement to reasonable notice and incentive scheme benefits.

The employee (Ms Roderick) was employed by Washington H Soul Pattinson and Company Limited (WHSP) an ASX-listed investment company for the period 2006 to 12 April 2018. Ms Roderick was initially employed in the position of Chief Financial Officer and was then appointed Finance Director in 2014. On 12 April 2020, WHSP terminated Ms Roderick’s employment without notice.

At the time of termination, she was WHSP’s second most senior employee and the only woman on its board. In her termination letter WHSP stated that Ms Roderick was ‘not the right fit’. She was paid three months’ salary in lieu of notice despite WHSP not providing her with any notice.

Ms Roderick claimed that she had lost benefits that would have been payable to her if WHSP had given her a reasonable period of notice of up to 24 months. This included entitlements to a short term incentive (STI) scheme and long term incentive (LTI) plan that she had participated in since 2016.

The central issue was whether at the date of termination the parties were bound by the original contract created for Ms Roderick’s CFO position or a new contract that was not yet in writing but had been discussed by the parties.

Ms Roderick claimed that the parties had demonstrated an intention to enter into the new contract of employment that commenced at the date of her appointment as Finance Director, evidenced by a new proposed draft contract sent to her by WHSP. WHSP argued that the parties remained bound by the original contract, as the new draft contract was neither signed nor agreed by the parties.