Employment Contracts: Do yours need a refresh?

Employment contracts serve as crucial documents outlining the terms and conditions of employment. They serve as valuable references in case of disputes or inquiries regarding an employee’s employment. Therefore, it’s imperative to ensure that contracts contain accurate, lawful, and up-to-date information.

Consider the following five points as a guide to ensuring your contracts are in good shape:

1. Currency

Given the continual evolution of employment laws, members are urged to regularly review their employment contracts to ensure they align with the latest legislative updates. Outdated terms within an employment contract may not only risk being unenforceable but also leave your business exposed and potentially in breach of the law.

2. Compliance with relevant industrial instruments

Employment contracts must adhere to the relevant Modern Award, enterprise agreement, or other applicable industrial instrument. It’s important to note that paying above the rates outlined in these instruments does not fully exempt a contract from their provisions or coverage. Contracts cannot be drafted with the intent to replace or ignore the application of industrial instruments.

3. Terms are relevant to the specific employee’s status (casual, part-time, full-time workers)

Different levels of benefits and entitlements are contingent upon an employee’s employment status. Accordingly, the contract terms should accurately reflect this, incorporating lawful and appropriate provisions corresponding to their specific type of employment. Misclassifying an employee in their contract can lead to confusion and misrepresentation of their initial engagement terms and entitlements.

4. Clear and precise regarding rates of pay and inclusions

Rolled up rates, or an above Award rate is often used to ease the administrative burden of different payment obligations (e.g. overtime, allowances and leave loading) which usually arise under an Award or enterprise agreement. Failure to clearly disclose the inclusions of the inflated rate or a well written set-off clause within a contract could result in back pay being awarded to the employee, if a breach is found.

5. Inclusion of policies in the contract

Once a contract has been mutually agreed upon, it cannot be altered unless both parties consent to the change, and both of you are obligated by terms outlined within it. Hence, the contract should only contain provisions that both you and your employee intend to be legally bound by. Any additional rules or requirements that you would like to enforce but retain the flexibility to amend periodically should be created into separate non-contracted policies and procedures that employees need to follow. This approach provides you the flexibility required to adapt to evolving dynamics and shifts within the industry and your business.

Did you know?

Did you know that the Master Builders Workplace and Relations team can review and help refresh your employment contracts? If your employee documents need a refresh, reach out to the team on (02) 6175 5900.