Employment agreements are important – here is why you need them

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Key points to remember

  • An employment agreement states the obligations for both the employee and the employer.
  • It acts as an important document in the event of disputes between the employer and employee.
  • There needs to be a different employee agreement for each category of employee; full-time, part-time or casual employment.
  • The contents of the employee agreement in Australia may differ depending on the type of industry. Certain industry agreements must contain safety clauses or different award payment rates.

What is an employment agreement?

An employment agreement is a contract that governs the relationship between an employer and an employee. It explicitly and clearly states the obligations of both parties, such as the service that will be provided by the employee and the remuneration they will receive from the employer. 

Why is it important to have an employment agreement?

Enforceability in the event of a dispute

A written employment agreement provides more certainty and is more enforceable than an oral agreement in the event of a dispute. Written employment agreements explicitly set out what the employer and the employee must do to fulfil their obligations under the agreement. In the event of a dispute, the employment agreement can be used to determine whether an obligation was breached by either party.

Policies and procedures

An employment agreement helps ensure both the employer and employee comply with the policies and procedures of the business. Policies and procedures can be shaped to fulfil the needs of your business. For example, you may include provisions regarding employee conduct, dress codes, bullying and the use of social media. The employment agreement may state that a breach of the business’ policies and procedures could result in disciplinary action and/or termination of employment.  

Restraint of trade provisions

An employment agreement helps protect the employee, the employer, against the detriment resulting from an employee moving to a competing business. Restraint of trade [link to restraint of trade blog] or non-competition clauses may be included to prohibit an employee from sharing information with a competing business for a fixed period of time after their termination. It can also be utilised to prevent employees poaching clients for competitor businesses after ceasing employment with the current business.

Compliance with the Fair Work Act 2009 (Cth)

An employment agreement helps ensure that the employer complies with employer obligations under the Fair Work Act 2009 (Cth). Your obligations under the National Employment Standards (‘NES’) will be set out in an employment agreement. 

What type of employment agreement is appropriate?

The type of employment relationship will help determine the appropriate employment agreement for your situation. Types of employment or employee engagement in Australia include: 

  • full-time employment;
  • part-time employment;
  • casual employment;
  • contracting (and sub-contracting); and 
  • unpaid internship programs.

When choosing an employment agreement, you should consider how often and how long the employee will work for you and what tasks they will undertake. For example, if you hire an employee who works every Wednesday to Friday on a permanent basis, a part-time employment agreement is most appropriate. But if you hire the services of a self-employed tradesman, then an independent contractor agreement or a service provider agreement is most appropriate.

Industry-specific employment agreements 

The appropriate employment agreement for your new employee may depend on the industry that your business belongs to. The employment agreement should set out any industry standards such as safety standards and the industry award for the employed position.  

Where can I find employment agreement templates?

Business Kitz has a range of employment agreement templates available for purchase. You can find a comprehensive selection of employment agreements for purchase in our document library. Please email info@businesskitz.com.au if you have any enquiries regarding these templates. 

Industry specific employment agreements for hair salons, restaurants, wholesale businesses and more can also be purchased from Business Kitz. Each Business Kitz resource contains comprehensive guidance notes as well as helpful suggestions to assist you with populating the document.

If you are considering drafting an employment agreement, but are unsure of the status of your employees and what category they fall under, you should seek legal advice. Legal Kitz business specialists can assist with ensuring that the correct employment agreement is drafted accurately so that you may avoid disputes from vague terminology or missing essential clauses for the operation of the employment agreement. 

Click here to book a FREE consultation with one of our highly experienced solicitors today or contact us at info@legalkitz.com.au or by calling 1300 988 954. 

The above information has been collected from relevant government websites and is subject to change. For the latest information regarding new or amended legislation, please refer to state and federal government websites. 

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