4 Things You Should Know Before Preparing an Employment Agreement
An Employment Agreement sets out the terms and conditions of employment. Here's 4 important things to know about using them.
An Employment Agreement is a legal document between an employer and employee that sets out terms and conditions of employment. Although most of the employment terms and conditions are covered by relevant Awards in Australia, it is an advantage for employer to have their own Employment Agreement. Benefits of having a tailor-make agreement include flexibility of terms and conditions that fit your business needs, and a better control over the employment relationship.
However, before you start preparing for your own Employment Agreement, there are four important things that you should be aware of.
1. Know your employee
This may sound a bit stupid, but often people think they can have an ultimate Employee Agreement template that can be applied to all employees. Sadly, that is not the case. Subject to different kinds of employment relationships, there are different laws and regulations for employer and employee to be complied with. In general, there are three types of employee:
- full time/ part-time;
- casual work;
- volunteer/ unpaid job.
All full time and part-time employees are covered by the 10 National Employment Standards (NES), which set out the minimum standards of employment such as maximum working hours, annual leaves and public holidays. Casual employees also have limited entitlements to the NES. It is important for employers know the nature of their employment relationship, and meet the minimum standards when they are drafting the Employment Agreement.
While the first two categories are commonly seen in workplaces, the latter is not an actual employment relationship. Having said that, it is not illegal to hire an unpaid intern or volunteer. To find out more information on hiring interns and volunteers, please check out our previous guide.
2. Devil is in the detail
One of the main purposes of an Employment Agreement is to avoid employment disputes. Some of the common disputes can be avoided from the outset by providing a clear introduction and detailed Employment Agreement. While a lot of things may seem to be generally presumed, such as the work venue, the position title and the job description, it would always be no harm to put everything in black and white in the agreement to avoid misunderstandings. Providing a clear description of the job can also help the employee to understand the process and their rights and responsibilities.
3. Measures to protect your company.
If you are running a business in a highly competitive or information-sensitive industry, it is vital to take precautions to protect value information. Protective clauses should be added to Employment Agreements to benefit the company. Commonly used clauses include confidentiality and non-compete clauses.
A confidentiality clause is often used in information sensitive industries, for the purpose of protecting confidential information of the company and its clients. A non-compete clause is used to prevent the employee from competing with the employer’s business both during and after their employment period. This is often used to protect the company’s interests, and prevent the employee from taking advantage of their position.
Although these clauses may seem powerful and favouring the company’s interest, the enforceability of these clauses are dependent on establishing a legitimate reason.
4. Use Attachments
Although details are important in an agreement as mentioned earlier, it is unnecessary for the Employment Agreement to incorporate each protocol and rule of the company. Supplemental documents such as HR policy and Code of Conducts can be presented in a form of an attachment to the Employment Agreement. This can avoid unnecessary complexity in the Employment Agreement, and provide flexibility to manage company policies. Employer should also note that every displayed rules and policies should be ready to be enforced, rules or policies that are displayed but have never been enforced would not be recognised when disputes arise.
There are a lot things to consider when hiring a new employee, and the Employment Agreement is the first legal bulward to protect the interest of your company in the employment relationship. Having a well drafted Employment Agreement may help avoiding a good amount of employment disputes.
Legal Guides: Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from Australia’s largest legal marketplace or to get answers to your legal questions.
Charlie is a Legal Intern at Lawpath working with the content team. With an interest in corporate finance and commercial law, he is currently completing a Graduate Diploma in Australian Law at the University of Technology in Sydney.