Are employment agreements useful?

Whether they are written , verbal or a combination, all employment relationships are subject to an agreement.

It’s not mandatory to have a written agreement and all employees (other than casuals) are protected by the National Employment Standards (NES) whether they’ve signed a contract or not. There are benefits having a written contract, with the key advantages being certainty of rights, obligations and employment status, as well as the inclusion of terms that aren’t covered in the legislation or applicable industrial instrument.

You can’t use an employment agreement to contract out of the NES or to make employees worse off than their minimum legal entitlements, but you can customise the agreement to suit your business and to include important features, rights and obligations that are not covered in the legislation or implied from the common law.

Examples of terms that you may wish to include in your agreement include:

Restraint of trade – to protect your business goodwill from competition from former employees post termination

Bonus plan or incentive scheme – to incentivise staff in addition to their base remuneration

Term and termination – to confirm (where applicable) the fixed – term nature of the engagement and to reduce the possibility of a wrongful dismissal claim

Probationary period – if applicable, to trial new employees

Use of company equipment – such as a work car, phone or laptop and the conditions attaching to such use

Confidentiality – if the employees will be dealing with particularly sensitive information you may want to specify what can and can’t be done and obligations to return information/property upon termination.

These provisions will not be implied unless they are clearly written into the contract. Written agreements are also helpful for managers and employees alike to understand the status of their engagement including whether they are part-time or casual, or an employee or a contractor.

We can assist you to prepare employment contracts for your business or to review your existing agreements to ensure they are compliant with the NES and other laws.

Please contact us if you would like to discuss.