Employment Contracts: Are They Legally Required?

Jul 18, 2019
Reading Time: 2 minutes
Written by Aditi Ramesh

Many small businesses do not understand the importance of an employment contract. Hence, they do not provide one to their employees. Although it is not legally required to do so, it is extremely beneficial to you and your employees. An employment contract highlights both the employer and employees’ roles and responsibilities. It can also include the agreed hours of work, different pay rates and employee leave entitlements. Regardless of an employment contract, the National Employment Standards (NES) will apply to every employee automatically. An employment contract must comply with these minimum entitlements. It is important to provide an employment contract for many reasons. One of the main reasons are that it clearly outlines the employment terms. This will be helpful if any future dispute arises. An employment contract will protect both parties by detailing exactly what is required from them.

Employer obligations

The success of management often comes from treating staff well. Therefore, it is important to abide by your legal obligations as an employer. These legal obligations come from a variety of sources including federal, state and territory laws. They also come from industrial awards and agreements and tribunal decisions. Moreover, verbal and written contracts of employment also detail these obligations.

Some legal obligations that employers have include the following:

  • paying employees the correct wages
  • reimbursing employees for work-related expenses
  • ensuring a safe working environment
  • not acting in a way that may seriously damage an employee’s reputation or cause mental distress or humiliation
  • not acting in a way that damages the trust and confidence necessary for an employment relationship

Drafting an employment contract

An employment contract protects the employer from potential future disputes. These disputes are usually regarding the agreed working hours and pay for employees. It is important that your document is clear and outlines the agreement accurately. Make sure to avoid any vague and contradictory terms that can be misunderstood. You should also avoid any discriminatory terms. There are a few things to consider before drafting your contract. This includes the nature of the employment agreement and whether it is casual, part-time or full-time. It could also be a contract position. You should also consider whether the role is covered by any agreements or awards. It is essential that your contract includes the minimum standards listed by the NES. These apply to all employees and is regulated by the law. Although you do not have to create a written agreement, it is effective.

National Employment Standards (NES)

Employers must comply with the National Employment Standards. These include the following:

  • maximum weekly hours;
  • annual leave;
  • parental leave and related entitlements;
  • personal carer’s leave and compassionate leave;
  • long service leave;
  • public holidays;
  • notice of termination and redundancy pay.

Don’t forget!

Employment contracts are not legally required. However, it is really important to have one to protect both employers and employees. These contracts detail the agreement between both parties. They can prevent future disputes regarding the nature of the employment. Employers have many obligations to their employees. Contact an employment lawyer for more information.

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