Employment Contracts

Employment Contracts

Why do you write employment contracts?

An employment contract is a signed, legally binding agreement between the employer and employee that details the duties and responsibilities of both parties.  The contract will act as a strong basis for protecting the involved parties and their position within the company and help ensure that both the employer and employee understand their rights and obligations.  Many employment contracts are poorly written or are purely verbal; hence they contain non-enforceable terms and conditions.  Without the presence of an employment contract, there are various issues that may lead to disputes or misunderstandings between the parties.

There is no legal obligation to have a written employment contract implemented, but it is advisable that a contract be drafted for all employees, regardless of their classification or status, as it is an important safeguard between the parties.  Therefore, if a dispute arises, the contract is always there to refer back to.

What information can be included in an Employment Contract?


The employment contract should include the following information, as a minimum:

  • Employee’s name and contact information
  • Employer name
  • Particulars about the employee’s position
  • Place and location of employment
  • Details of pay and benefits
  • Type of employment
  • Technicalities regarding termination notice

Additional things may also be included in employment contracts, meaning the contracts may vary in size depending on the circumstances of the position.  Various clauses restricting certain conduct during employment should also be mentioned:

  • Confidentiality clause: ensures employees are aware that the confidential information obtained during their work should be used sparingly and not in any inappropriate forms
  • Non-solicitation clause
  • Non-compete clause

It is important that both the employer and employee sign the contract before the employment commences.  Contracts should be concise, written in plain English and a copy provided to the employee.


Award Free Employment Contracts


In some circumstances, an employee is not covered by an award.  They are considered to be award free, meaning unless there is an employment contract present, they may have limited entitlements.  In order to find out whether an employee is covered by an award, the employee must work in a covered industry, work in a job classification that is covered and not work in a job that is excluded from the award.

Employment Contracts with an Award


Even in the presence of an award, it is still beneficial that an employment contract is utilised.  It means that they are entitled to the minimum legal entitlements with the addition of the negotiated extra circumstances that the contract fosters.  In summary, the presence of an employment contract can never worsen the position of an employee within the institution and can only equal or improve the conditions provided within the NES or award that covers your workplace.

“Set-Off” Principles


If there is a legitimate clause within the contract specifying that an above-award rate is paid in satisfaction of the related award entitlements, a set-off will usually be permitted.  This “set-off” principle is the clause that gives authority to seize a payment equivalent to the amount owed to them under the agreement.  This alone is a significant reason to have even a simple one-page employment contract.

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For queries about employment contracts, adverse action, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 WAL LAW, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law.  It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues.  Liability limited by a scheme approved under professional standards legislation. 

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