Should I give my employees an employment contract?

It’s important that your new employee knows the conditions of their employment and what’s expected of them.  Giving them an employment contract is the starting point of welcoming them into your business.

What is an employment contract?

The employment contract is an agreement between the employer and the employee.  It should be a record of the employee’s start date, salary, work location, entitlements in relation to overtime and penalty rates, working days and hours. It can also give details about leave entitlements, resignation notice periods, confidentiality, policies, any equipment provided, and whether there are any post-employment obligations.

It sets out the specific terms and conditions of employment.

Can I use the same contract for permanent employees and casual employees?

An employment contract for a permanent employee is different to a contract you would give to a casual employee as the conditions and entitlements are different.

You can also have a fixed term contract for a permanent employee if you only need to employ someone for a fixed period of time.

Can a contract of employment be changed?

You can’t make changes to an employment contract without the agreement of your employee.

You would normally advise your employee about any changes that you are considering if you are issuing an updated contract. You shouldn’t force an employee to sign an updated contract that will reduce their entitlements.

A perfect example of when you would issue an updated contract would be if you are offering your employee a promotion or a better package.  You may also update contracts if you find that your current contracts are outdated or lack the detail that you need.

You can’t force someone to sign or agree to a contract so it’s a really good idea to make sure the employment contract is signed before your employee’s first day.  This will avoid any misunderstandings and any problems that may result from an employee refusing to sign a contract once they have started employment with you.

How should I give my employee their employment contract?

An employment contract can be given to an employee in hard copy, sent by email or it can be sent through a cloud-based HR system where the new employee is given access to the system to enable them to receive their employment contract and other induction paperwork. They can return the signed copy of the contract and other paperwork through the HR system.

Does an employment contract have to be in writing?

A verbal agreement can also be legally binding, but terms of a verbal contract are harder to prove without written evidence. For example, if there’s a disagreement about entitlements, it’s hard to establish what was agreed without a written record.

If you decide not to provide an employee with a written employment contract, you’re still required by law to provide all new employees with a copy of the Fair Work Information Statement. The Fair Work Information Statement provides employees with information about their rights under the National Employment Standards (NES).

Should I include my HR policies in my employment contract?

Including HR policies in an employment contract can put an employer at risk if an employer fails to abide by their own policies as it could potentially create a breach of contract by the employer.

HR policies should be issued separately, effectively communicated and acknowledged by employees.  It’s also easier to update and re-issue HR policies if you need to.

Quite often, employment contracts will include a clause stating that workplace policies do not form part of the contract. But, it should be clear that an employer expects that their HR policies will be observed by its employees by referring to the HR policies in the contract.

Is an employment contract the same as an Individual Flexibility Agreement?

An Individual Flexibility Agreement isn’t a substitute for an employment contract.

Flexibility provisions within Modern Awards allow an employer and an individual employee to enter into an arrangement to vary some terms of the Award that may meet the individual circumstances of the employment relationship, for example varying starting and finishing times.

An Individual Flexibility Agreement can only be agreed upon after a person has commenced employment with the employer and is usually for a set period that may be reviewed with agreement by both employee and employer.

Can a contract provide for less than the National Employment Standards and Award minimum entitlements?

Even an employee agrees, an employment contract can’t provide for less than the legal minimum set out in the National Employment Standards (NES) and Modern Awards or enterprise agreements.

An employment contract can’t make employees worse off than their minimum legal entitlements.

Start the employment relationship on the right foot by setting out expectations.