What businesses can learn from Australian racing driver Oscar Piastri and the latest F1 contract mayhem

Australian racing driver Oscar Piastri shocked the Formula 1 world on Wednesday, denying a public statement from F1 team Alpine that he will drive for the French outfit in the 2023 season.

The drama surrounding one of motorsport’s most promising young stars has added a new level of intrigue to the sport — while also highlighting the need for businesses to issue rock-solid contracts when securing in-demand talent.

21-year-old Piastri serves as a reserve driver for Alpine, a current midfield runner in the elite world of Formula 1 racing, and was widely tipped to race for the team full-time after winning the Formula 2 world championship in his rookie season last year.

After years in the team’s development program, Piastri seemed destined for a senior Alpine seat when Fernando Alonso, a two-time F1 world champion and current Alpine driver, on Tuesday announced his surprise switch to competitor Aston Martin for the 2023 season.

On Wednesday morning, the Alpine Twitter account confirmed Piastri would appear on the F1 grid next year — an incredible career achievement in and of itself, given just 20 seats exist in motorsport’s most prestigious series.

https://twitter.com/AlpineF1Team/status/1554500248432680960

But Piastri publicly denied the statement just hours later, dropping a bombshell on a sport already grappling with Alonso’s unexpected reshuffle.

“I understand that, without my agreement, Alpine F1 have put out a press release late this afternoon that I am driving for them next year,” Piastri said.

“This is wrong and I have not signed a contract with Alpine for 2023. I will not be driving for Alpine next year.”

I understand that, without my agreement, Alpine F1 have put out a press release late this afternoon that I am driving for them next year. This is wrong and I have not signed a contract with Alpine for 2023. I will not be driving for Alpine next year.

— Oscar Piastri (@OscarPiastri) August 2, 2022

Piastri’s extraordinary denial comes amid unconfirmed reports he and his management are exploring options with another team.

With further updates yet to emerge from the soap opera drama, Piastri’s next steps are unclear.

However, the team which has fostered his development is sticking to its position. In a statement provided to Reuters, Alpine said: “We believe we are legally correct in our statement.”

Contract “misalignment” an issue for Australian businesses, employees

While the story involves elite names in international motorsport, the saga can provide lessons for both Australian businesses and workers negotiating their own terms.

Speaking generally about employment negotiations, Andrew Jewell, principal at Jewell Hancock Employment Lawyers, says certainty is fundamental to contract design.

That certainty should come at three levels: whether employment actually exists, the kinds of remuneration offered, and the scope of the role itself.

A “misalignment” on the core aspects of employment can harm both parties, Jewell tells SmartCompany.

“I’ve had cases where employees have been told they have a job, so they’ve resigned from their current position. And then they’ve been told, ‘Wait, there’s actually no role there for you.'”

The inverse can be harmful, too. Cases exist where employers try to rescind offers even after contracts are signed, “and there are consequences to the employer in that scenario.”

Both employer and employee should also be crystal clear on pay, including bonus arrangements, and commission arrangements, Jewell says.

And both parties should “try to think about the relationship and how it’s going to work, who does someone report to,” he added.

Clarity around training, mentorship, and flexibility are also crucial in today’s contract negotiations.

“Those sorts of things are important to look at at the outset.”

Talent shortages require employer rethink

Beyond the potential legal and reputational damage faced by employers which mishandle contracts, Jewell says there can be significant follow-up costs to a bungled relationship.

“If the employer spends time investing in their candidate, chooses them, and proceeds with their employment, but they’re misaligned on the role, they could lose that candidate,” he said.

“And then they’re back in the market, which could be very costly.”

Such concerns do not only apply to hotshot drivers and the billion-dollar companies behind F1’s top racing teams.

Extraordinary tightness in parts of the Australian labour market mean employers should stop keeping proposed contract terms “close to their chest” during negotiations, lest they lose candidates to another suitor.

“I think in the current environment, I’d encourage employers to be open with the candidates, tell them that they’re the leading candidate, tell them they’re interested,” he said.

“Because if you don’t give that feedback, that person might go and accept another job because they think they have to.”

Employees may have multiple options in today’s market, meaning it is important for companies to differentiate themselves though the benefits they can provide employees, he adds.

The world of Formula 1 provides one last parallel to the local jobs market, too.

While every driver aims to cross the finish line first, driving too erratically can damage performance. At the same time, laboured strategy decisions from the pit lane can destroy a successful race.

In the same way, it is vital for employers to “strike the balance between moving quickly, because you want to lock in your favoured candidate, but not so quickly that you employ people who don’t work out.

“So I suppose the hard part for Australian businesses is to just strike that balance to make sure that you’re giving yourself the best chance to get the best talent.”