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 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
- 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.