Employment contracts form the foundation of all employment relationships. A strong, compliant, and up-to-date employment contract will significantly assist a business in all areas of people management.
The below checklist lists some of the most important clauses which should be included in every employment contract.
1. Remuneration:
As obvious as this is, it is extremely important to set out the payment terms in a contract of employment and ensure this meets the National Minimum.
2. Work Arrangement and Hours of Work:
An employment contract should set out the start date of the employment contract and the type of employment arrangement, i.e. full-time, part-time, casual, fixed-term, maximum term, etc.
3. Warranties:
A warranty clause is an important clause of any contract of employment as it provides a warranty that the employee has the necessary skills, qualifications and/or licenses to perform the inherent requirements of the role. It also provides for a warranty that the employee is legally entitled to work in Australia.
4. Leave Entitlements:
Under the National Employment Standards (NES), employees have access to various leave entitlements, such as annual leave, personal/carer’s leave, compassionate leave and family and domestic violence leave.
5. Probationary Period:
A probationary period allows for a period of time in which an employer can assess the suitability of an employee; and an employee can assess the suitability of the role and their employer. A probationary period may not be longer than the Minimum Employment Period (MEP) which is 12 months for small business (<15 employees) and 6 months for others.
6. Confidentiality/Intellectual Property:
Through the course of an employee’s employment, an employee may come across various forms of “confidential information” including, but not limited to, an employer’s intellectual property.
7. Termination of Employment – with and without notice:
The termination clause in a contract of employment should include provisions for termination with and without notice. This clause will govern the terms on which an employer can lawfully exist an employee from the business. Equally, a termination clause will also outline the notice period an employee is required to give their employer should they resign from the business.
8. Post-employment Restraints:
This is a critical clause to include in an employment contract as it prevents a former employee from soliciting or attempting to solicit current employees or clients of the business as well as undertake work for a competitor.
9. Deductions:
If there are circumstances in which you have agreed to deduct funds from an employee’s salary, these should be clearly stated in the employment contract to prevent any possible misunderstandings or disputes.
10. Off-set Clause:
The importance of an off-set (or ‘set off’) clause is that it enables an employer to pay an employee a salary or hourly rate which is inclusive of other entitlements under the Award such as annual leave loading, penalties rates, overtime, allowances and the like.
Other Items
As a matter of best practice, we recommend that the following items also be included in the employment contract:
- position title;
- reports to position;
- primary location(s) of employment;
- commencement date of the agreement/contract;
- commencement date of the employee’s employment;
- pay frequency;
- pay day;
- applicable industrial instrument (i.e. Modern Award, Enterprise Agreement)
For further information and assistance on Employment Contracts please contact the Team at HRM – 5430 7750 or ask@hrmcc.com.au
