Employment contracts are legal documents that are crucial for employers as well as employees. A strong, watertight employment contract, compliant with current employment legislation, can protect employers from potential lawsuits and keep employees from breaching the terms.
Why are employment contracts important for employers, and what information should you include in them?
Why Employment Contracts Are Important for Employers
Employment contracts contain details such as remuneration, leave, duties and responsibilities, maternity or paternity leave, sick leave, reasons for termination and so on. They spell out the duties and expectations from the employee and employer and act as a reliable source or reference in the event of a dispute.
Drafting a proper employment contract also ensures the protection of confidential information and important company data. Most importantly, the terms and conditions in a signed legal employment contract are likely to be upheld in court, in case of any problems, as opposed to verbal agreements.
Well-structured employment contracts reduce the likelihood of expensive and stressful lawsuits that can waste your valuable time and financial resources.
What Should Employers Include in Employment Contracts?
We list out important information that every employment contract should cover:
The contract should specify the hours of work, the nature of duties, probation period and location of work. It should also include employment type (fixed, contractual, part-time, etc.) and qualifications required for the position.
Salary, Overtime and Leave Pay
Employment contracts should specify gross and net salary, rate for overtime pay, if applicable, and annual or monthly leave pay. Please state transparent overtime pay for weekends and after-hours.
Health and Safety Regulations
According to Australian laws, every employer is responsible for the wellbeing of employees. Please include workplace rules and regulations regarding PPE, safety equipment and precautions.
Termination of Employment and Notice Period
It’s crucial to include reasons for termination and how the employer or employee can terminate employment. We strongly recommend following the regulations included in the National Employment Standards.
Confidentiality, Restraint of Trade and Intellectual Property
The contract must specify legal consequences for poaching clients or interfering with employer-supplier relationships after termination of employment. Employees are expected to respect company confidentiality at all times. The employer should have legal rights to intellectual property created by an employee during the employment period.
Every Australian employer should ensure that a prospective employee signs an employment contract before commencing work. The terms and conditions included in an employment contract will vary depending on the type of employee you are looking to recruit. For example, the employment contract for hiring a foreign, temporary employee may be different from a contract to hire a local worker.
Two Common Mistakes Employers Make in Employment Contracts
- Failure to Comply with the Latest Amendments – Employment contracts are often out of context with the latest legislations in the National Standards Act. It’s essential to stay compliant with the latest updates, especially during the volatile aftermath of the COVID outbreak. Failure to stay current may result in penalties and punitive action.
- The Employment Contract is Ambiguous – If the contract contains broad and ambiguous terminology, this makes it harder to resolve disputes that may arise. Employers should ensure that the contract is clear and concise, leaving no room for confusion and misunderstanding.
Owen Hodge Lawyers can help you draft well-defined, unambiguous and legally compliant employment contracts. Our trained business or employment lawyer will ensure that all aspects are spelled out, and we will draft and review the agreement as well as offer guidance regarding enforcement of restraints.
Please contact us on 1800-770-780 to discuss how we can help you and your business.