Employment contracts: 10 key points to getting them right


An employment contract is an agreement between an employer and employee that sets out the terms and conditions of employment. According to the Fair Work Ombudsman, an employment contract can be verbal or written, but we would strongly caution anyone against relying solely on a verbal contract as they can be misunderstood or forgotten. A valid, well-drafted written contract is crucial. Employers should take care to prepare compliant, enforceable employment contracts that are tailored to your own circumstances.

Employers should take care to prepare compliant, enforceable employment contracts that are tailored to your own circumstances.

An employment contract is an agreement between an employer and employee that sets out the terms and conditions of employment. According to the Fair Work Ombudsman, an employment contract can be verbal or written, but we would strongly caution anyone against relying solely on a verbal contract as they can be misunderstood or forgotten.

“Just sign on the dotted line…”

A valid, well-drafted written contract is crucial. It creates certainty for both parties, formalises the terms of the professional relationship and reduces the risk of costly disputes by detailing payments, timeframes and work to be performed.

Like any contract, employment contracts are usually only rolled out when there are disputes or things are not working out. A good employment contract will set out how a dispute can be resolved, and how either party can end the contract before the work is completed.

Employers should take care to prepare enforceable employment contracts that are tailored to your own circumstances. Here are our 10 key points to getting them right:

  1. Comply with the minimum wage and employment conditions under various employment laws, awards, enterprise agreements and taxation laws. Specify how the contact interacts with National Employment Standards and other various legislative requirements.

  2. Include confidentiality and non competition clauses. This may include provisions on intellectual property, or post-employment restraints.

  3. Clarify the nature of the relationship and whether the arrangement is a “services contract” for employing an independent contractor, or an “employment contract” for taking on casual, part-time or permanent employee.

  4. Specify the terms of employment, including the employee’s position description, duties, work days, hours and location, breaks, reporting arrangements and dress code.

  5. Specify the remuneration and whether the employee will be paid based on hours worked or an annual remuneration package. Include details on superannuation.

  6. Include details on leave arrangements, such as holiday pay, sick pay, long service leave and leave without pay.

  7. Include provisions in relation to bringing the contract to an end, such as termination, notice periods and redundancy.

  8. Name any relevant benefits, for example vehicle, mobile phone, computer, uniform, travel, health insurance or other allowances.

  9. Specify employee compliance requirements such as vaccinations, first aid certificates, working with children checks, police or bankruptcy checks, licenses, certifications or registrations, continuing education, and a requirement to comply with workplace policies.

  10. Make sure you review the contract on a regular basis, keeping it updated and compliant with new legislation affecting employment.

Developing your own complying employment contracts can be tricky. WorkPlacePLUS can support employers with tailoring employment agreements to suit your specific circumstances.

In addition, the WorkPlacePLUS team can help mitigate your business risk by reviewing your current HR documentation and practices, to identify areas for compliance or improvement.

For more information, please contact us today.