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Understanding the Importance of Employment Contracts

Whilst employment contracts aren’t a legal requirement in Australia, when in place they are a legally binding document between an employer and an employee. 

Many employers have found themselves engaged in costly and unnecessary disputes with employees, most commonly around entitlements because they failed to frame the working relationship with a clear, written contract. Whilst the Fair Work Commission also recognises verbal employment contracts (subject to evidence), here at Workplace Partners we recommend written contracts to ensure you have a clear and identifiable agreement should you be involved in a dispute. 

Like many elements in business, it is best to implement good practice and structure from the beginning rather than having to backtrack and finding yourself constantly plugging leaks. Written employment contracts are safety nets for you and your business that are simple to put into practice and by doing so can save you a lot of heartache and grief down the track. 

Business owners who have overlooked the significance of a written employment contract have unfortunately, learnt the hard way when an employment relationship ends on less than amicable terms and a dispute arises. 

What does an employment contract include?

Although employment relationships are usually governed by legislation and any applicable Awards or Enterprise Agreements (including NES), there are a wide range of aspects that should be covered and documented in a contract including but not limited to;

  • Hours of work
  • Remuneration (including any set off for over award payments)
  • Confidentiality
  • Intellectual property
  • Restraints (post-employment)
  • Leave entitlements (taking of leave and notice requirements)
  • Termination notice
  • Performance reviews and unsatisfactory work performance
  • Dispute resolution
  • Company policies
  • Governing laws

Including position descriptions within your employment contracts can also help to clarify the expected tasks and performance requirements of a role. Much like employment contracts, position descriptions should be reviewed regularly to ensure that the expectations of both the employee and employer are clear from the outset. We recommend reviewing contracts when major legislative changes occur to ensure you are protected from any potential dispute. 

A small investment in getting a professional employment contract drafted can help mitigate a domino effect of claims that may arise in your business.

If your business requires assistance in drafting employment contracts or enterprise agreements please contact us on 1300 116 400 or send us an email at [email protected]

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