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Employment Agreements: A Quick Explanation

What is an employment agreement? 

An employment agreement, also known as an employment contract, is a legally binding agreement between an employer and an employee that outlines the terms and conditions of employment.

It is a crucial document that sets out the expectations and obligations of both parties and serves as a reference point in the event of any disputes or misunderstandings.

What is the main purpose of an employment agreement?

The main purpose of an employment agreement is to establish the terms and conditions of employment, including but not limited to the following:

  • Job title and description
  • Working hours and schedules
  • Compensation and benefits
  • Leave entitlements
  • Performance expectations
  • Termination procedures
  • Confidentiality and non-compete clauses
  • Intellectual property rights

What are the various types of employment agreements?

There are various types of employment agreements in Australia, including full-time, part-time, casual, and fixed-term contracts. Each type has its own set of requirements and obligations, depending on the nature of the job and the industry.

What key things should be included in an employment agreement?

Regardless of the type of employment agreement, there are key things that should be included to ensure clarity and avoid ambiguity. These include the job title and description, remuneration, hours of work, leave entitlements, notice periods, and any specific requirements or restrictions.

Is employer agreement a contract? 

An employment agreement is a type of contract, which means that it is legally binding and enforceable. As such, it is important to ensure that the terms and conditions are fair and reasonable and that both parties fully understand and agree to them.

Can I write my own employment contract? 

While it is possible to write your own employment contract, it is highly recommended that you seek legal advice or use an employment agreement template provided by a reputable source such as Lawpath. This will ensure that the document complies with relevant legislation and covers all necessary details.

Is it a legal requirement to have an employment contract in Australia 

In Australia, it is a legal requirement for employers to provide their employees with a written employment agreement within the first month of employment. This agreement must include specific details, such as the rate of pay, working hours, and leave entitlements.

Can employers change contracts without an agreement? 

Employers cannot change employment contracts without the agreement of the employee unless there is a specific provision in the contract that allows for variation. Any changes to the agreement must be made in writing and signed by both parties.

Are employment agreements legally binding/enforceable in Australia? 

Employment agreements are legally binding and enforceable in Australia, provided that they comply with relevant legislation and cover all necessary details. 

In the event of a dispute, the agreement will be used as a reference point to determine the rights and obligations of both parties. It is therefore important to ensure that the document is accurate, clear, and complete.

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The relationship between an employer and employee is fundamentally contractual. All employees should be employed under employment agreements, however employees will still be subject to the entitlements outlined in the National Employment Standards (NES). The benefit of using an individualised employment agreement is that you can set out terms not covered by national law. These include terms relating to confidentiality, notice periods and incentives.

An employment agreement can be simple or detailed depending on the needs of your business. What works for you depends on:

Despite this, all employees should be given a formal written employment agreement that clearly states the rights and duties of each party.

Is a written employment contract necessary?

It’s important to understand that even if you don’t use an employment contract, a contractual relationship will still exist. In addition to setting out the rights and duties between an employer and an employee, an employment agreement can also help avoid disputes further down the track. Although all employees always have some form of employment contract with their employer (set out by national laws), a formal agreement helps avoid disputes down the line.

Using the right documents when hiring

When hiring employees, there’s a number of documents that will help ensure recruiting new members to your team is a smooth process. Formalising each step of the hiring process will make it easier to run and protect your business long-term.

1. Letter of offer

When you decide to hire someone for a role, it’s best practice to formalise this offer in writing. This letter should inform the candidate that they’ve been successful in applying for the role, confirm the title of the role and their start date. A formal letter of offer should compliment the employment agreement which follows.

2. Employment Agreement

Along with your letter of offer, your employment agreement should include:

3. Workplace policies

Part of running a safe and productive workplace is having policies in place to manage this. Not having policies in place may lead to miscommunication and confusion amongst your employees about what is expected. Policies can also help you deal with workplace issues and significantly reduce legal risk. You should provide new employees with copies of your workplace policies when they start the job. Some of the most important policies you should have include:

Conclusion

Employment agreements can save your business confusion, time and money in setting out your terms clearly. Employees tend to perform best when they know what is expected of their role and when they understand what their obligations on the job are. Further, by making clear what you expect of your employees, you’ll also be protecting your business in the event that the employment relationship comes to an end.