Understanding Employment Contracts

Employment contracts contain terms and conditions that the employee and employer agree upon.

Ideally, this contract should be written rather than confirmed verbally to avoid miscommunication or misunderstandings.

You should include the following terms and conditions in your employment contracts:

  • Name and personal details of the employer and the employee
  • Commencement date of employment and probation period (if a permanent employee)
  • Clause referring to employer policies and procedures
  • Clauses referring to essential requirements of the role, e.g. Licences, clearances, registrations
  • Type of employment (i.e. full-time, part-time or casual)
  • Place of work and hours of operation of the business
  • Remuneration clause – setting out the method of payment e.g. salary, wage, or piece-rate) and what is included or paid separately e.g. superannuation, loadings, overtime, bonuses, benefits and allowances. Commission is usually set out in a separate scheme.
  • Leave entitlements – the NES provides compulsory minimum standards for various types of leave e.g. annual leave, personal leave, long service leave
  • Clauses protecting employer property and information – e.g. company vehicle, intellectual property
  • Confidentiality agreement making clear what employer information should be kept confidential and setting out the possible consequences of a breach
  • Non-disparagement clause preventing the employee from any action which can reflect negatively on the company
  • Amount of notice required to be given by the employer and employee to end the employment relationship (there are minimum notice periods under the Fair Work Act)
  • Termination conditions, including Redundancy
  • Clauses regarding Assignment, Jurisdiction, Severability and Variation of Terms

Contracts may also contain implied terms, i.e. not misusing confidential information.

Employment contracts are also governed by legislation which provides further information about the minimum terms required, remedies that can be utilised, and basic regulatory frameworks.

The industry you are in may also have additional industry-specific requirements that are legally reinforced.

Employment breaches occur when employers or employees fail to comply with the contract terms. The innocent party may be entitled to sue for the damages that have occurred due to the breach – so that they can be restored. A substantial breach may also allow an immediate termination of the contract and additionally allow individuals to sue for any loss incurred.

If an employer or employee has breached a contract, it may be easier to navigate the difficult processes that need to be completed with the help of a legal advisor. This is because a breach of contract can be fairly nuanced, and information provided on websites may not be sufficient enough to lead the process without help from a legal professional.

The government can provide free or concessional legal advice, which should be utilised if required, as legal proceedings can often be costly.