Employment Contracts

employment contract

A written employment contract is the best way of protecting the interests of both the employer and the employee and establishing the terms of the engagement.

Although their significance is sometimes overlooked, employment contracts are an important part of the hiring process that can have important implications later on – especially if the engagement ends on less than amicable terms.

Employment Contract Essentials:

  1. All employees should have written employment contracts.
  2. Finalise company policy on employment conditions that include:
    • Hiring procedure and any probationary periods
    • Current Employment Legislation
    • Induction and training
    • Disciplinary Action
    • Unacceptable Behaviour and Poor Performance
    • Improving and Maintaining Performance
    • Termination
    • Restructuring and Redundancy
  3. Establish whether the contract is:
    • A common law agreement
    • Individual Transitional Employment Agreement (ITEA)
    • Agreement for Award covered employees
    • Employee Collective Agreement
    • Union Collective Agreement
    • Independent Contractor Agreement
  4. Outline employment conditions that:
    • Are appropriate for the job
    • Comply with award/agreement provisions
    • Comply with the Minimum Conditions of relevant state and federal legislation and other employment obligations.
  5. Terms of employment should be clearly articulated.
  6. Include relevant clauses such as confidentiality or intellectual property, termination of notice, etc.
  7. Draft the contract document using plain English.
  8. Discuss the contract with the employee to ensure that they understand their conditions, pay and obligations under the contract.
  9. When signed, give employees a copy and keep one on file.
  10. Always keep appropriate employment records.

Remember: all contracts need to be current. If an employee’s role or duties change a new contract should be entered into. It is also a good idea to review contracts if there are major changes in legislation.

Sample clauses for an Employment Contract
Basic Information

  • Names and details of employers and employees.
  • Background – (including whether the agreement is under common law or an award).
  • Employment status (e.g. full-time, part-time or casual).
  • The probationary period and start date of the contract (and end date if fixed term).
  • Who employees report to in the organisation.
  • Job title.
  • Key job duties and/or standards of performance.

Employment Conditions

  • Agreed pay rate and superannuation, and method of Payment.
  • Any other remuneration, including allowances, performance bonuses or arrangements in relation to salary sacrifice, FBT, parking or use of a company vehicle etc.
  • Leave:
    • Annual leave
    • Long service leave
    • Sick leave
    • Bereavement leave (inc. termination of contract stipulations)
    • Parental leave
    • Public Holidays
    • Cultural leave
  • Hours of work, including details of meal breaks and what arrangements apply for additional hours or shift work.
  • Location of work

Other Conditions

  • Company policies and rules, including performance standards, employee conduct and disciplinary procedures.
  • Protection of confidential information and intellectual property acquired during employment and following termination of employment.
  • Termination of employment and notice periods or pay in lieu of notice.
  • Other issues:
    • Medical Examinations
    • Protection from the sun
    • Unused insurances and memberships
    • Uniforms or dress standards
  • Provision for varying the contract.

Letter of Offer
In some cases a letter of offer may be considered to constitute an employment contract. For this purpose, the letter of offer from the employer should include:

  • the name and address of the employer;
  • position responsibilities and duties;
  • remuneration;
  • hours of work;
  • whether full-time, part-time or casual;
  • employment conditions, such as leave entitlements, allowances etc; and
  • employment arrangements you will be working under, such as an award or agreement.

However, a written employment contract is always the preferable option.


Photo by indigoprime

About Diarmuid Sexton

Diarmuid is Adroit People’s Managing Director and HR Practice Leader. Since 2001 Diarmuid has worked with clients in the medical device, pharmaceutical, legal and ICT sectors in Europe, Asia, Australia and the US providing strategic HR, recruitment and outplacement support.

His experience ranges from workforce planning to executive search, performance management and redundancy / career transition across technical, legal and commercial disciplines.

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