Employment contracts: 10 keys to getting them right (Australia)
- Apr 1, 2024
- 3 min read
Updated: Apr 14
Employers must take care to prepare compliant, enforceable employment contracts that are tailored to their business, workforce, and applicable laws.
An employment contract is a legally binding agreement between an employer and employee that sets out the terms and conditions of employment. While contracts can be verbal, relying on unwritten agreements significantly increases the risk of misunderstandings, disputes, and non-compliance with the Fair Work Act 2009.
Like any contract, employment contracts are usually only rolled out when there are disputes or things are not working out. A employment contract should assist in resolving employment questions and issues.
A well-drafted written contract creates clarity, manages expectations, and protects your business when issues arise, particularly during disputes, performance management, or termination.
Why employment contracts matter more than ever
Workplace laws in Australia are evolving rapidly. Reforms such as the Closing Loopholes legislation, increased enforcement by the Fair Work Ombudsman, and the introduction of Payday Super (from July 2026) mean outdated contracts can quickly become non-compliant.
If your employment contracts haven’t been reviewed in the past two years, there is a strong likelihood they are already out of date.
Outdated contracts may be partially or entirely unenforceable, exposing your business to underpayment claims, penalties, and reputational damage.
What makes a compliant employment contract?
A compliant employment contract must align with the National Employment Standards (NES), any applicable modern award or enterprise agreement, and other legal obligations such as taxation and superannuation laws.
It must also reflect the true nature of the employment relationship, not just what is written on paper.
10 keys to getting employment contracts right
1. Ensure legal compliance from the outset
Your contract must meet minimum entitlements under the Fair Work Act 2009, including the NES, modern awards, and applicable legislation.
2. Clearly define the employment type
Specify whether the employee is casual, part-time, or full-time. Misclassification can lead to underpayment and leave entitlement breaches.
3. Set out duties and role expectations
Include a clear position description, reporting lines, duties, and work expectations.
Poor role clarity is recognised as a psychosocial hazard under work health and safety laws and can contribute to workplace stress, conflict, and performance issues.
4. Detail working hours and arrangements
Specify hours of work, flexibility, hybrid arrangements, location, and rostering expectations.
5. Get remuneration right (and compliant)
Outline wages or salary, including whether it is award-based or an annualised salary arrangement. Include superannuation obligations in line with the Superannuation Guarantee (Administration) Act 1992.
6. Include leave entitlements
Cover annual leave, personal/carer’s leave, long service leave, and any additional entitlements in line with the NES and relevant state legislation.
7. Capture allowances and benefits
Document any benefits such as vehicles, allowances, bonuses, or professional development support.
8. Include compliance and qualification requirements
Specify requirements such as registrations, licences, Working With Children Checks, police checks, vaccinations, and ongoing professional development.
9. Protect your business with enforceable clauses
Include confidentiality, intellectual property, and (where reasonable) restraint of trade clauses such as non-compete and non-solicitation provisions.
10. Include termination and review provisions
Clearly outline notice periods, termination processes, and redundancy provisions.
An employment contract is most relied upon when the relationship breaks down. If it is unclear or outdated, it may fail when you need it most.
Don’t forget: contractor vs employee risk
Employment contracts are only part of the picture. You should also regularly review any independent contractor agreements.
Recent changes under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 mean that whether someone is an employee or contractor depends on the real substance, practical reality, and true nature of the relationship.
Even if a contract labels someone as an “independent contractor”, they may legally be an employee if the working relationship operates like employment in practice.
Read: Contractor or employee? >
Avoid copy-paste contracts
Using generic or recycled contracts is a common cause of compliance breaches. Every role, award, and workforce structure is different.
Get your contracts right (and keep them current)
A tailored, up-to-date employment contract is one of your most important risk management tools. It supports compliance, protects your business, and provides clarity for your employees.
If your contracts haven’t been reviewed in the past two years, now is the time to act.
WorkPlacePLUS supports employers across Australia to draft, review, and update employment contracts and contractor agreements to ensure they are legally compliant, practical, and aligned with current laws.
For support or more information, contact WorkPlacePLUS today.
