Nicholson, who doubles as a game-caller for Channel 7, was featured on SEN radio waves on Friday and discussed the topical issue following Stuart Dew's Suns sacking on Monday.
Quizzed on the circumstances surrounding coaches' contracts not being financially binding and paid in full at the point of termination, Nicholson detailed the significant importance of the issue, noting the problematic absence of a Collective Bargaining Agreement for coaches.
"It's something that's a really important issue for us," Nicholson began on Friday.
"If you're a player in a CBA you get [a] full payout, you get retirement fund, you get three years of welfare support, but the coaches don't have a CBA, they have employment agreements with clubs, and in 2020, the AFL, for clubs that were getting extra money, restricted the amount of payout that a coach can get.
"That's something we would like reversed or at least have coaches better compensated if the deal is torn up early."
"You look at the Brett Ratten situation. He hadn't even started his contract. Stuart Dew was 30 percent through his contract, so the boards of these clubs really get a free swing at that and I think there needs to be more consequences for the decisions."
Nicholson believes the issue should be dealt with by the AFL rather than the clubs.
"I think it needs to start with the AFL and going if I walk into a football club, whether it's as a development coach or a senior coach, that job security and some certainty is just one of the top three things," he said.
"That is something we've absolutely pushed with the AFL and another example of that volatility.
"When you stand back and look at the value the coaches bring to our game, they're the face of the club, they drive the culture, it's something that is worth considering and there's a lot of international precedent for it as well.
"My challenge to the AFL and obviously the new CEO is how are we making this profession better?
"Our surveys show that from a mental health and wellbeing point of view, 42 percent of coaches are either average or below. We've got a significant number of coaches who don't think they're well-regarded by the AFL.
"I do think it's a priority issue in the game, looking after the health and wellbeing of the coaches and also the attractiveness of the profession."
Dew's Suns contract was set to run through until the end of 2024, however, following chairman Bob East's return from overseas on Monday, his fate as coach was sealed.
Gold Coast owned a 7-7 record a fortnight ago, however, after beltings at the hands of Carlton, Collingwood, and Port Adelaide in the space of a month, the club's hopes of securing a maiden finals berth are drastically fading.
Dew's sacking has drawn many mixed opinions about the future of the Suns, as assistant Steven King was named the caretaker and speculation continues to rein about the possibility of the unoccupied position eventually belonging to three-time Richmond premiership coach Damien Hardwick, following his Punt Road exit earlier this year.