Congratulations! You have just landed your dream job at your dream company. All that’s left to do now is sign your contract of employment. Do you understand all the clauses? Are they legal and reasonable?
I’m sure you have all received an employment contract at some point in your career or as an employer you have provided them to your employees. During my career I have seen some interesting contracts consisting of an email trail, a 1 page letter to a 15 page document with legal jargon that I’m sure most lawyers would struggle with.
So what is a contract of employment? Basically, it is an agreement that governs the relationship between the employee and the employer and sets out what is expected of them both during employment.
Contracts of employment will usually consist of three fundamentals:
- There must be an agreement that offers a person employment under terms and conditions and for that person to accept the offer.
- Each party entering the contract must be providing something of value. The employer will be providing a wage in return for the employee’s time and skill.
- Each party must freely enter into the legally binding agreement. This is completed by the employer providing a contract of employment and the employee reviewing the contract of employment and signing the document.
Employers and employees entering into a contract of employment agree to the terms and conditions or may negotiate them at times. Some terms and conditions are governed by the law and cannot be changed.
So what can you put into a contract of employment and what are definite no no’s!
Yes yes yes!
- Who the agreement involves, the names of the employer and employee.
- What the employee will provide the employer and what the employer will provide the employee. Salary, hours of work, position etc.
- The type of employment. Full time, part time or casual.
- If you can engage in other forms of employment and if there are any restrictions on the type of industry.
- How employment can be terminated.
- Your entitlements during and after employment.
- Individual flexibility Agreement when applicable.
- Probation period.
- Pre-employment disclosures.
- Bonus schemes, commissions or profit shares.
- Restraint and non-solicitation clauses although these can be difficult to enforce.
No no noooooooo!
- Putting restrictions or removing entitlements such as not providing parental leave.
- Making the working week more hours than the relevant Award without paying penalty rates.
- Unreasonable working requests.
- Paying under the Award minimum and not paying any entitled allowances or penalties.
- Having a probation period longer than 6 months. The only exception to this rule is if an employer has less than 15 employees. Then the probation period can be up to 12 months.
- Not paying superannuation or paying less than the minimum contribution.
Generally, you are bound by the terms and conditions in a contract of employment so make sure you read it thoroughly and ask any questions if you do not understand before you sign anything.
If you need help creating contracts of employment minus the legal jargon, reviewing or updating your contracts of employment give HR gurus a call, we can help.