Employment Agreements - not just for show!

Deborah Peppard - HR Director

 
​​Small businesses typically take a fairly informal approach to appointing new staff.  Often it is done verbally and if there’s time, there may be a short written position description. Many don’t go the extra step in drawing up an employment contract.   While there is no legal requirement for you to provide an employment contract, it should be high on your priority list if you want to protect your business.  Here’s why:

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1. Start on the right foot
Employment agreements are the foundation of good working relationships.  It’s professional for a business to have them and it’s an opportunity to document employee and employer obligations. It’s often the first formal communication with a new employee and it’s important to make it count.  Avoid using legalese.  Instead, use plain English and a friendly tone, to explain any legal stuff clearly and simply.  It’s important to make a good impression. 

 
2. They don’t break trust, they build them
Putting things in writing, for some, means that they have to talk openly and honestly with their employee.  Sometimes this is confronting and uncomfortable.  But it doesn’t have to be!

If you want to avoid miscommunication and legal headaches in the long-term, it makes good business sense to have a robust contract in place.  Documenting information about the employee, the role, the remuneration, leave entitlements and terms of employment ─ including termination terms ─ safeguard your business and ensures you and your employee have a mutual agreement. 

3. It’s legal
Employment contracts don’t need to be complicated. At a minimum you must advise your employees of what Award and classification governs their employment.  It’s a legal requirement.  The Fair Work Commission provides a list of Awards for each industry.

What you include in your contracts should be tailored to your business.  Consider including information around confidentiality, intellectual property, additional employment benefits and special provisions. The list is never ending. Make sure that content is clear and concise.

It’s also legally binding once signed by both parties and can only be changed by mutual agreement.  Also, employment contracts cannot provide less benefits to an employee than what the employee is entitled to as per the National Employment Standards (NES) as well as what is outlined under their relevant Award or enterprise agreement. 

Finally, make sure your employee signs and returns a copy of the contract and you place this on his/her employee file. They should also keep their own copy.

Stay relevant
Employment contracts should be reviewed regularly to ensure you have kept up to date with changes in employment law, wage increases, reflecting changes within your own business and so forth.  Keep in mind that all terms of employment contracts are by agreement between both the employer and the employee.  This means that to effect any change to the terms of an employment contract, an employer must have the agreement of the individual employee. If an employee continues to work without agreement, then the terms of the old contract will continue to apply until such time that a new contract is agreed upon and signed.  Changes to Modern Awards and Enterprise Agreements generally apply to all employees they cover without requiring express agreement. 

HR Staff n’ Stuff are well versed in preparing and updating best practice employment agreements.  Give the team a call if you want to implement contracts in your business or need to audit what’s already in place.

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