Employment contracts are not just formalities; they are essential employment documents that can help reduce risks for your business. They set conduct and performance expectations, and support compliance with relevant laws and regulations.

The importance of a well written contract

Employment contracts must align with the Australian and other relevant State or Territory employment laws, including, but not limited to, the Fair Work Act 2009 (Cth) and any relevant awards or agreements.

You cannot contract someone out of their minimum entitlements.

A carefully drafted contract can help ensure compliance, protecting both parties from legal issues that may arise down the track. Protections for your business include confidential information and intellectual property, safeguarding business information and preventing employees from using or disclosing information improperly.

Employment contracts should clearly outline the terms and conditions of employment:

• Position responsibilities
• Salary
• Benefits
• Working hours
• Termination procedures.

This clarity helps prevent misunderstanding and disputes which can lead down costly paths.

Defining the employment relationship

Clear communication is key to any successful working relationship. Employment contracts serve as the foundation of this communication by defining expectations and responsibilities of both parties.

Employees should be aware of what they are agreeing to when they start, so ensuring the expectations and responsibilities of both parties are clearly outlined in the employment contracts is crucial. We recommend the position description is attached and included as part of the contract of employment.

Protect your business interests

For small and medium businesses, protecting your business interest can be crucial for your growth and success. Employment contracts can contain, non-compete and non-solicitation clauses designed to protect the business’s interests. These clauses can prevent ex-employees approaching your clients, your current employees or plagiarising your work when they leave.

Confidentiality agreements within the contract can also safeguard sensitive business information, trade secrets and intellectual property.

By having these protections in place, understood, and agreed, you have a better chance of mitigating the risk of losing valuable assets and ensure your business continues to grow in the competitive market.

Common clauses

Some commonly referenced employment contract clauses:

1. Remuneration

Employees place significant value on their pay, ensuring they are being paid correctly and negotiating their remuneration package.

For employers, it is crucial to ensure the remuneration clause in contacts provides employees with their entitlements while also protecting businesses.

One for the most frequently asked questions concerning employee remuneration involves offset clauses. The intricacies and legalities surrounding offset clauses is complex, making it imperative to have a well-drafted offset clause in your contract if you intend to invoke it.

2. Termination

Even with the best intentions, not all employment relationships end successfully. Employment contracts should include termination clauses, specifically notice periods, severance pay, and exit procedures, to ensure departures are handled professionally and in line with what has been agreed.

Business Chamber Queensland recommends employment contracts are reviewed every 12 months. Further, we have developed a comprehensive suite of contract templates to assist businesses. To purchase templates, or for information specific to you, contact our Workforce Advisory Services team.