Are non-executive directors entitled to long service leave?

Saturday, 01 November 2003

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    FAQ of the month


    Are non-executive directors entitled to long service leave?

    Only employees are entitled to long service leave. Non-executive directors are not entitled to long service leave. Executive directors may be entitled to long service leave, but the entitlement will only apply to their role as an executive and not as a director.

    Some companies pay retirement benefits to non-executive directors. What is AICD's view?

    AICD does not encourage the payment of retirement benefits to non-executive directors as it believes that director's remuneration should be linked to their performance whilst serving on the board not their length of service. Section 200G of the Corporations Act discusses the payment of retirement benefits to directors by public companies. For further information see the AICD Issues Paper 02/03 'Non-executive director remuneration' at www.companydirectors.com.au under Policy and Information/Policy and Advocacy.

    Are non-executive directors entitled to redundancy packages?

    Non-executive directors may be entitled to redundancy packages but this will depend on whether they were able to negotiate this benefit at the time of their appointment. An example of where redundancy packages could be relevant to directors, as opposed to executives, is the situation where two companies merge and the boards are combined and restructured.

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    The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.

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