The ‘Qualified Independent Person’ - The What?
29 September 2023
Amendments made to the Local Government Act 1999 (the Act), as part of the broader Local Government Reform process, has seen the introduction of a new ‘person’ into the legislative framework, being that of the Qualified Independent Person (the QIP).
When the relevant sections (97 – 102A) of the Act were amended to make provision for the role of the QIP, by Gazette notice published on 10 November 2021, we provided a ‘Snapshot Alert’, that overviewed the provisions.
However, some two (2) years on, drawing from our involvement as the QIP in numerous CEO Performance Review and Recruitment processes, we now provide this Alert setting out our learnings, as well as ‘best practice’ considerations for your council processes.
This is noting, of course, the importance of the recruitment / performance review processes for a council, the CEO being considered as the only ‘employee’ of the governing body.
The starting position is that under the Act, the QIP has functions and responsibilities in respect of:
- the termination of the CEO’s employment on grounds of misconduct, failure to carry out duties satisfactorily or to specified performance standards or on grounds specified in the contract of employment (section 97(3a) of the Act); and
- where relevant, the appointment of a CEO (section 98(4a) of the Act); and
- the (now) annual performance review of the CEO (section 102A of the Act).
In all of the above instances the QIP is defined as a person who is:
- not a member or employee of the council and;
- determined by the council to have appropriate qualification or experience in HR management.
In a CEO termination situation, the council MUST have regard to advice from a QIP.
In the circumstances of a CEO appointment, where the council has appointed a QIP, the council MUST obtain and consider the advice of the QIP on the assessment of applications and recommendations from the recruitment panel on the appointment. It is to be noted that in a recruitment, the council has a discretion under section 98(4a) to appoint an independent person to the panel and/or a QIP.
In the now mandated annual CEO performance review, the council MUST obtain and consider the advice of a QIP.
Importantly, therefore, the council has a duty, whether it is to have regard to, or to obtain and consider, the advice of a QIP in each of the prescribed circumstances set out above.
Learnings and Best Practice Considerations
There are a number of questions which have arisen as part of these processes in relation to the role of a QIP upon which we can provide guidance:
- a QIP is a person with experience or qualifications in HR management practices (which can include a consultant or legal adviser with appropriate expertise) that undertakes functions and responsibilities in the nature of an auditor of probity, process and/or procedure;
- the importance of the appointment and role of a QIP should not be underestimated. It is a legislative requirement in the employment space, where any failure by the council will, likely, be adverse to the interests of the council as an employer;
- section 98(4a) of the Act specifies that, for the purposes of a recruitment process, a council must ensure that either or both of the following occur:
- the appointment of at least one (1) person who is not a member or employee of the council; and/or
- before making the appointment to the position of CEO, it obtains and considers the advice of a QIP on the assessment of applications and recommendations on the appointment;
- in our view, for reasons that are obvious, an independent HR consultant/recruiter appointed by a council as a member of the panel to assist it, to provide advice and guidance on a CEO appointment process cannot also be the QIP in that process;
- this is because of the very clear and irreconcilable conflict of interest/conflict of roles for the HR consultant. A person in such a role is not in a position to demonstrate to a responsible, impartial and informed person that they are unequivocally capable of being independent in circumstances where the QIP requirement is to provide advice both objective and at ‘arm’s length’ on process and procedure and the probity aspects of the recruitment;
- this is particularly illustrated by the legal requirement for the QIP to, independently, advise and provide guidance to the panel and/or the council, in a process wherein the HR consultant is also a member of the panel;
- however, the situation remains the same in our view, where the HR consultant is appointed by the council but not as a member of the panel. An independent HR consultant/recruiter appointed to assist by providing advice and guidance to a panel (and, ultimately, to the council) on the recruitment process and candidates for interview, cannot also be the QIP, overseeing and commenting upon their advice but without the benefit of independence and impartiality in the process/procedure!
- relevantly, the role of the QIP in a recruitment process is particularly significant and powerful in that he/she is able to make their own recommendations to the council on the CEO appointment, irrespective of the recommendation that may be made by the panel;
- separate from the QIP considerations, it is also to be observed by having regard to similar considerations, from a ‘best practice’ perspective, a HR recruiter should be an independent adviser to the panel/the council and not a member of the panel that relies upon their expert guidance and recommendations;
- equally, an independent HR consultant/recruiter appointed by a council to provide advice and guidance in a CEO annual review, cannot also be the QIP in that process. Otherwise, the result will be that they are providing advice to the Council on the probity and rigor of the process/procedure upon which they have previously proffered advice to the council!
As an aside, from a corporate governance ‘best practice ‘perspective’, caution must also be exercised about the engagement of the same HR consultant who assisted the council with the recruitment process, later being engaged as the QIP in the performance review processes for the successful candidate. It is ‘self-evident’ that the consultant will have a ’vested interest’ in a positive outcome on that review for the candidate that they helped to appoint!
Do not hesitate to contact us if we can assist further:
Michael Kelledy on 08 8113 7103 or firstname.lastname@example.org
Tracy Riddle on 08 8113 7106 or email@example.com