Many people think that if they do not have a written contract of employment then they are not under a contract of employment. This is incorrect. A verbal agreement can still be an enforceable agreement at law. The real question is whether that contract is subject to verbal or written terms or a combination of the two. The advantage of a written contract is that everyone can clearly see what the terms are and know where they stand. This is also important in the event of a dispute between the employer and the employee.
Also when drafting a contract, keep in mind that the Fair Work Act 2009 provides employees with considerable protection and flexible work conditions in the workplace. Employers should also be aware of the National Employment Standards (NES), which provide a safety net for employees.
Whether you are updating your employment contracts or drafting them for the first time, consider including the following ten points.
- A clear job description. This should set out the role and duties of the employee. A clear job description makes it easier to tell if an employee is not performing their duties and needs additional assistance or remedial action.
- Salary or wage details. Aside from the salary, the contract should include superannuation and any overtime, bonuses and allowances that are relevant. The contract should also provide for a salary review.
- The nature of the employment. Your contract should state whether the employee is hired on a full time, part time or casual basis to avoid ambiguity.
- The reporting structure. A clear reporting structure benefits both the employee and employer and provides for a clear line of accountability.
- Leave entitlements. The written contract should contain clear terms concerning leave entitlements relevant to the employee such as annual leave, long service leave, sick leave and compassionate, bereavement and paternity leave.
- Confidentiality. In many industries, employees will be required to maintain confidentiality about some or all of their business practices. The contract should clarify what information is to be kept confidential and the consequences for failing to do so.
- Non-compete/restraint of trade. This clause helps to provide boundaries for employees when engaging with clients and businesses in competition with the employer. It will often set out a time restriction after the employee ceases working for the employer in which the employee cannot work directly with a competitor.
- Protection of intellectual property. A term regarding intellectual property to protect the information which belongs to the employer.
- Termination process. A written contract should lay out the conditions under which termination will occur.
- Dispute resolution. A dispute resolution clause will specify what to do in the event of a dispute between the employer and employee.