There is no law that states that you need to have a Contract of Employment when you employ a worker. Indeed, there is such a concept as the psychological contract, which is the unwritten agreement between a worker and employer, where the expectation is ‘a fair day’s work for a fair day’s pay’. That is ‘The Good’. However, ‘The Bad’ is that it can be very difficult to defend and clarify terms within a psychological contract.
These days industrial relations in Australia is a complex area with many specific nuances and interpretations, so having a written contract of employment is paramount. A good contract assists your workers by defining their expectations and highlighting the employment relationship parameters.
So now, you have heard ‘The Good’ and ‘The Bad’ – but what is ‘The Ugly’?
‘The Ugly’ is the details!
Many employers are unclear about why they need employment contracts, or more importantly, what should be included.
A good contract of employment should address many areas including nature and status of employment, for example– whether the employee is permanent or casual. Obviously, information like working hours, location of work and specific information regarding to performance reviews and code of conduct is also a must.
There are many instances where clients will say ‘We are using the contract we have always used’ or ‘I put together our contract a few years ago’.
The problem with this response is that Industrial Relations has changed enormously over the past few years. Think back to the State System, then Work Choices and now Fair Work.
Your contracts may not be suitable for the current industrial relations legal requirements.
Many employers also want to have specific items written into their contracts, such as post employment restraints.
Protections for your business can be written in, such as the post employment restraints, intellectual property protections and moral rights. Clauses of this kind can protect your business in situations that may arise down the track, or give you options to use the ‘Breach of Contract’ scenario.
Issues can arise if you copy old contracts or those given to you from friends and business associates. You may inadvertently include entitlements that are less than the minimums, or clauses that are no longer legal. If you comply with these incorrect clauses, you may be in breach of Fair Work and open to employee claims and fines. Conversely if you inadvertently add clauses that give greater entitlements, you many be locking your business into huge payments that legally you are not required to pay, however, because you have included them in the contact, may now be locked in.
So do not write your own contracts or use the one your sister-in-law gave you from her workplace. It is just not worth the risk. Use a contract written by employment law solicitors and customised for your specific business such as Nine2three instigates for our clients.
Now you are aware of The Good, The Bad and The Ugly, protect your business and use a strong legally written Contact of Employment.
Important Note: These articles have been prepared for general circulation and are circulated for general informational purposes only; these articles should not be regarded as business or investment advice. The articles represent the views of the writers and are subject to change without notice. Additionally, while every care has been taken in the preparation of the articles no representation or warranty as to accuracy or completeness of any statement is given. An individual or organisation should, before any business or investment decision is made, consider the appropriateness of the information in this document, and seek professional advice, having regard to objectives, situation and needs. This document is solely for the use of the party to whom it is provided.