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Every employee in Australia has a legally binding employment contract. In some industries, employment contracts tend to be verbal or take the form of an initial offer letter. Other sectors and organisations favour detailed written contracts.
Either way, an employment contract is a legally binding statement that outlines the key terms and conditions of an individual’s employment and the rights and responsibilities of both employer and employee.
Australia has a combination of federal and state legislation relating to employment contract law. Nationally, the National Employment Standards and the Fair Work Act 2009 (Cth) outline the minimum terms, conditions, and entitlements that most Australian workers can expect. State-based legislation covers worker health and safety, leave entitlements, and freedom from discrimination, harassment, and workplace bullying. Alongside existing state and federal legislation, an employment contract provides additional protection.
The primary purpose of an employment contract is to protect the relationship between employer and employee and provide a tool that will hold either party accountable if they fail to stick to what has been agreed. It should outline your employment type, whether full-time, part time or casual, and may detail other benefits or conditions of employment.
Employment contracts can also include considerations not typically covered by legislation, providing both parties with clear expectations, obligations, and conditions of employment and a level of certainty about entitlements and requirements.
For instance, every contract will likely include a commitment to the remuneration an employee can expect. Details and conditions around bonuses or commissions might also be included, as might additional parental leave entitlements.
You may be asked to read and understand an employee handbook, equal opportunity policy or occupational health and safety documents, before signing a contract
A contract may also stipulate the amount of notice an employee must provide if they intend to resign from their role. Rules around social media engagement, non-disclosure agreements, and intellectual property ownership might also be covered.
In cases where one party is seen to have breached the terms of an employment contract, the existence of a clear and well-worded legal document will support a fair resolution, ideally without the need for Fair Work or court intervention.
Stevens and Associates Lawyers is one of Sydney’s leading law firms in the area of employment law. Get in touch with our friendly team for practical advice about any workplace matter you need assistance with.
While it is not a legal requirement to provide a new employee with a contract, it is highly advisable for both parties to do so. It protects both employers and employees, and outlines conditions of employment clearly.
Recruiting offers by employers should be clear and unambiguous, and letters of offer can be sent with the intention of creating legally binding arrangements. So, although it’s not compulsory to have your own employment contract drawn up for your staff, it will ensure that the nature of the employment relationship is clear. This alone can prevent conflicts arising in the future and also be referred to if proceedings are commenced, for example, in unfair dismissal or general protection cases before the Fair Work Commission in the first instance.
When an employer makes offers of work to a new employee, it is standard practice to outline remuneration, hours and basis of employment, usually in writing. In Australia, if you have not received a contract, you will still be covered by the NES (National Employment Standards).
You will also be covered by any industry awards or enterprise agreements that are relevant to your work, regardless of if you have signed something.
A contract that provides less than what is set out in those awards and arrangements is not legally binding, even if it has been signed. Australian employment law ensures that all employees are covered by certain requirements that no agreement can override.
A verbal agreement, or no agreement at all, isn’t generally in the best interests of either an employer or employee, but is not illegal. If you haven’t received a contract and would like one, you can ask your employer to provide one.
If you are in any doubt over the nature of your contract, Stevens and Associates Lawyers are highly experienced employment lawyers, who can offer you professional advice on a variety of workplace matters.
A standard employment contract should be reviewed as often as the nature of work being performed changes, or when work requirements or payment structure or terms change. Employers should ensure that this is done in a timely manner, as soon as any alterations are needed.
An employment relationship that is clearly defined in writing encourages clear workplace relations and performance expectations. This ensures that any contractual disputes are able to be resolved more easily. Contracts may also be updated if workplace policies and procedures change, with a new contract being issue that outlines these.
If you are unsure about your current contract, or need to update employee contracts for your business, it’s a good idea to contact workplace lawyers for expert legal advice and a professional review of any current agreements in place.
Many people choose to sign their new employment contract without having it first reviewed by a lawyer, which is something that we would never recommend doing.
Employment contracts often contain complex terms that have substantial implications for the employee during and after the employment relationship ends, for example an employee’s obligations around post-employment restraints of trade or other duties.
Consulting a lawyer before signing an employment contract lets you know where you stand concerning the contractual terms (and what they mean). A lawyer can point out any areas of concern and help you negotiate a better position for yourself with your new role.
While consulting a qualified lawyer on drafting an employment contract is not a legal requirement, it is highly advisable. After all, many considerations must be made if all possible outcomes are to be covered.
Your employment lawyer will use their in-depth understanding of employment law to help you draft, review, and finalise contracts, letters of appointment, restrictive covenants, and post-employment restraints.
Taking advice from an employment contract lawyer will ensure your adherence to the National Employment Standards, with all necessary considerations reflected correctly in the wording. Your lawyer will check that the contents are transparent, legal, and fair, making the document helpful for navigating disputes should they arise while protecting your business’ interests.
A correctly worded employment contract overseen by expert legal eyes is the most effective way to ensure robust protections are put in place for both employer and employee.
The breach of an employment contract occurs where its terms are not adhered to, either by the employer or employee. Because employment contracts are legally binding, any breach can have serious consequences.
There are many ways an employment contract can be breached, depending on what is covered in the document.
Examples of breach of employment contract by employee:
Examples of breach of employment contract by the employer:
If you suspect the breach of an employment contract has occurred, it’s essential to check you have fully understood your rights and obligations. Consulting a legal expert will confirm whether your concern does represent a breach. Beyond this, they will offer advice on what you should do next and what you can expect regarding a resolution.
In a word, yes. In New South Wales, you can be dismissed if you have breached the terms of your employment contract.
Again, the answer to this question is yes. People’s circumstances change over time, as do the requirements of a business. Employment contracts allow for these changes by stipulating what needs to happen for someone’s employment to be terminated.
A contract typically stipulates the period of notice an employee must provide if they intend to resign and that an employer must provide should they wish to terminate a worker’s employment.
Failure to adhere to termination provisions in an employment contract might represent a breach of contract and could result in one party taking legal action against the other. It is essential to consult a lawyer if you believe you or your business may be in breach of an employment contract or if you are on the other side of the fence and suspect a breach of an employment contract has occurred to your detriment (or the detriment of the business).
In many instances, employment contract breaches can be amicably resolved through gentle discussion.
If you believe there has been a breach, the first step would be to check the terms of the contract. Once you’re confident a breach has occurred, and if you feel comfortable, consider raising it directly with the other party. You may find you can reach an agreement between yourselves about what a fair resolution should look like, with no further action necessary.
If this course of action does not yield a satisfactory result, or you don’t feel able to have the conversation yourself, talk to an employment lawyer about alternative approaches to dispute resolution. They will review your contract, listen to the specifics of your situation, provide an overview of your rights and responsibilities, and outline the possible paths to resolution.
In New South Wales, solutions for an employee might include monetary compensation in cases of financial loss, psychological distress, or negative impact on career progression. Solutions for the employer might consist of something known as ‘specific performance of an employment contract’. This court order requires the employee to meet their performance obligations, as outlined in their employment contract.
The above actions are fraught with complexities, which is why it’s so important to seek sound legal advice from an experienced employment contract attorney who is well versed in employment law issues.
Employment contracts tend to become more complicated when hiring for senior executive roles. There may be a need for additional or more complex terms and conditions around remuneration, performance targets, confidentiality, company vehicles, stock and shares, travel expenses, benefits, redundancies, restraints, privacy and more.
The additional complexities associated with executive employment agreements can increase the possibility of breaches occurring. Therefore, it is all the more important to seek legal expertise in negotiating and developing executive contracts so that swift resolutions can be facilitated if disputes arise.
If you need professional advice regarding an executive contract, Stevens and Associates are dedicated employment contract lawyers, Sydney CBD based, servicing clients Australia wide.
Stevens & Associates, a Sydney based specialist employment law firm, offers a complimentary and confidential initial consultation with one of our employment contract lawyers. The purpose of this call is simply to determine if we are the right fit for your needs.
Our dedicated employment law expert will listen to your situation, understand your goals, and provide you with personalised advice on how to proceed.
A recent decision[i] of the Fair Work Commission has clarified the legal principles which are used by the Fair Work Commission to determine whether a relationship is that of employer and employee or principal and
A recent case before the Fair Work Commission Full Bench (FWCFB) has given greater scope to workers under maximum term contracts to seek recourse in the unfair dismissal jurisdiction (Navitas).  Prior to this decision,
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