By Key Business Advisors
HR

Congratulations!  You’ve successfully hired a new employee to join your business. However, have you made sure they completely understand their employee contracts? Have you set the expectations for your business? Is there any jargon that needs explaining? Are the clauses legal?

According to the Fair Work Ombudsman: an employment contract is an agreement between an employer and an employee that sets out terms and conditions of employment.  A contract can be in writing or verbal.

I’m sure during your career you have come across a variety of different contracts from a 1-page letter to a 10-page document with added schedules.

Contracts of employment generally consist of 3 fundamentals:

  • The agreement must offer a person employment under T&C’s and for the offer to be accepted.
  • There is a trade of value. The employer will pay a salary for the employee’s time and skill set.
  • The agreement is entered into freely.

T&C’s of contracts can be negotiated at the time of job offer however, you need to keep in mind that some T&C’s are governed by law and cannot be changed.

Here are KBA’s top tips when creating a contract of employment for employees.

The Do’s

  • The name of the employee, employer and trading entity.
  • What both parties will provide in the agreement. g. salary, hours of work etc.
  • Status of employment.
  • Employment restrictions.
  • Probation period.
  • Tool of trade
  • Restraint of trade clause
  • Bonus or commissions

The Don’ts

  • Putting restrictions or removing an entitlement under the NES or applicable Modern Award.
  • Enforcing a working week that is more hours than the relevant Modern Award with paying the applicable penalties.
  • Under paying employees in line with the relevant Modern Award.
  • Not paying the legislative minimum superannuation.
  • Having a probation period longer than 6 months. The only exception to this is for small businesses who have a maximum probation period of 12 months.

If you need assistance in creating contracts of employment that are easy to read and compliant, call Key Business Advisors on 1300 4 ADVICE.

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