Contracts and Policies

An employment contract involves several terms and conditions that can be in writing or verbal that provides an agreement between an employer and an employee. 

It is vital for a business to have a legally compliant employment contract tailored to the operations of their business. 

An employment contract should outline all key information regarding the position as well as everything an employee has to know about working for the employer. This can include: 

• Employee rights;
• Remuneration;
• Working hours; 
• and a lot more.

There are no restrictions as to what can be stated in an employment contract. Employee contracts can vary between different industries and positions.

An example of an employment contract can be:

• The commencement date of employment;
• Job Title and Description;
• Working hours per week;
• Type of Employment;
• Confidentiality Agreement;
• Restraint of Trade.

These terms are only a small part of a contract and it is vital to seek legal advice to draft a correct and effective contract tailored to your business.

There are different types of employment contract with each type having their own advantages and disadvantages such as tax obligations and industry standards.

The different types of employment contracts include:

• Full-Time - This is an ongoing employment arrangement and involve several standards that has to be met and agreed to. The employee works an average of 38-40 hours a week.
• Part-Time - These contracts is also an ongoing employment arrangement, however, the contract usually states working hours of less than 38 hours a week. The hours work are still consistent each week and the employee are entitled to the same employment entitlements as full-time staff. Part-time arrangement is ‘pro-rata’.
• Casual - These contracts is not a permanent agreement, working as an on-demand basis with the work hours being irregular. Casual workers are not entitled to paid leave and can be terminated at any time without notice.

It can be a very tedious and confusing process to create an accurate and legally binding employment contract that will also negate future contractual disputes. This is why there are several issues to consider prior to drafting a contract to ensure it covers all areas possible from taking on the employee to termination.

Some issues that should be considered may include:

• Lack of Specificity - A contract should stipulate the obligations of each party – any detail known should be included. All components of the contract should be in writing and not have parts of the contract be verbal as this will negate any potential disputes in future. For example, if payment is to be paid online, the payment details should be written out (BSB and Account Number).
• Stating information regarding the contract’s termination - Some contracts fail to state information and the process of the termination process of an employee which can lead to future disputes. The employer should consider how termination can occur and how notice should occur if so.
• Post-termination obligations of the employee - What can occur after the end of an employee’s employment is still relevant to an employer and should not be forgotten. Terms that can have an employer covered in future conversations include restraint of trade and confidentiality agreements.

Every contract should abide by the relevant award/enterprise agreement it is in as well as the National Employment Standards (NES). These requirements can be found on the Fairwork Australia website here

The NES states 10 legal requirements all businesses should follow, it is a legal offence if a contract provides less than what is stated in these standards. The NES 10 requirements include:

• Maximum weekly hours;
• Requests for flexible working arrangements;
• Annual Leave;
• Personal/carer’s leave;
• Community service leave;
• Long service leave;
• Public holidays;
• Notice of termination and redundancy pay; and
• Give a Fair Work Information statement

All employment contracts can have implied terms, which are terms not necessarily set out in writing or agreed verbally but are terms that still form part of the employer and employee agreement. 

Notable examples which the law implies in an employment agreement are duties and responsibilities both parties should have. For example, this may include the employer’s duty to provide a safe system of work as well as to take action to avoid foreseeable risks of injury.

In some cases, a particular industry may create implied terms in a contract due to the standard industry practice. It can be industry practice to always wear a hi-vis jacket and this can be an implied term for the employee.

Depending on nature of the employer, they might be subject to different awards, either state or federal award. This will then have different obligations to the employer. 

For example, casual loading differs between Federal and State law – with State Law having 25% loading and Federal Law having 17% loading.