By Brigitta Poulos
It’s common for employers to have questions about what to include in an employment contract. However, an equally important question but less frequently asked one is: What should not be included in a contract?
While employers aren’t legally required to issue employment contracts to their employees, it’s best practice to do so and will help protect both parties. Here I discuss the intricacies of these agreements, why businesses must be mindful of the terms used, and what an illegal contract looks like.
Include or exclude: what goes into an employment contract?
Inclusions: The list of contract term inclusions is standard across the various forms of employment types and industries and involves clearly setting out the essence of the agreement between the parties.
Exclusions: The list of contract term exclusions is possibly even longer than the inclusions. The terms must not detail anything discriminatory, contrary to the law or an applicable industrial agreement, and should avoid anything ambiguous, vague, or contradictory. However, there are a lot of landmines that need to be avoided.
Minimum obligations: what are they?
An employment contract can’t stipulate any conditions that are less than the minimum standards set out in legislation, awards, or agreements, including the National Employment Standards (NES). All national-system employees are covered by the NES, regardless of whether they’ve signed a contract, are working on a visa, or are juniors, temporary, or casual staff. Any attempts to exclude or avoid the NES minimum conditions, even by mutual agreement with the employee, will have no effect.
Minimum standards in the NES include:
- minimum notice periods for ending full-time or part-time employment;
- minimum amounts of redundancy pay;
- different types of leave entitlements;
- rules around work and payment entitlements for public holidays; and
- rules around casual conversion.
An example of illegality
Even if a term of a contract doesn’t breach the NES, it may be void for illegality in another way, including where it:
- is discriminatory (for example, permitting the employer to terminate the employment if the employee becomes pregnant);
- is a breach of the general protections (for example, authorising the employer to reduce the employee’s salary if they join a union); or
- requires or authorises a party to do something which is otherwise against the law (for example, making deductions from employees’ wages other than under the Fair Work Act 2009, or to work more than the worker’s visa conditions).
It’s a good idea to have an HR or legal professional draft your employment contracts to identify any concerns or make suggestions for improved protection. Contracts are vital documents which govern the relationship between you and your employees – having a poorly drafted contract, or no contract at all may lead to lengthy and costly disputes that can be easily avoided.
We recommend always having an HR or legal professional draft your employment contracts to help identify any concerns before they become issues or make any suggestions for improved protection. Contracts are vital documents that govern the relationship between you and your employees – having poorly drafted contracts or no contract at all may lead to lengthy and costly disputes that can be easily avoided.
For more information on employment contracts or support with any other workplace matter, you might have, please contact our experts via our 24/7 Telephone Advisory Service.
Brigitta Poulos is a Workplace Relations Advisor at HR Assured who loves helping clients and businesses achieve excellent workplace compliance with their obligations and duties, and interpretation of relevant employment legislation and awards. She particularly enjoys researching and explaining new or ‘hot’ topics in the workplace relations and human resources fields to our clients.