Employment agreement basics – what to look out for

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An employment agreement is a contract that governs the relationship between an employer and an employee that sets out the terms and conditions of employment.

Key points to remember

  • An employment agreement is essential when engaging new employees at your business, to ensure you set out clear rights, obligations and expectations. 
  • It is important to have an employment agreement in writing to provide more certainty. This also assists in disputes.
  • Have employment agreements for full-time, part-time, casual, contracting,subcontracting and internship employment.

1. What is an employment agreement? 

An employment agreement is a contract that governs the relationship between an employee, and your business as an employer. An employment agreement explicitly states the obligations of you and your employee, such as service and remuneration, for example.

2. Why is it important to have an employment agreement?

Enforceability in the event of a dispute 

Employment agreements are essential for defining the relationship between you and your employee or contractor. Written employment agreements provide more certainty, and are more enforceable than oral agreements in the event of a dispute. Written employment agreements explicitly set out what you and your employee must do to fulfil your 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 of you.

Policies and procedures 

Employment agreements will usually bind you and your employee to act in accordance with the policies and procedures of the business. These policies and procedures will set expectations for the behaviour and conduct of both you and your employee. They can also  be shaped to fulfil the needs of your business. For example, you may include provisions about 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 may result in disciplinary action and/or termination.  

Restraint of trade provisions

An employment agreement may also include ‘restraint of trade’ or ‘non-competition’ clauses to protect your business against your employee moving to a competing business. For example, if an employee who has intimate knowledge of your business development plan moves to a competing business, this may cause a big problem for you. If you have placed a restraint of trade clause in the employment agreement, the employee may be prohibited from working for or sharing information with a competing business for a period of time after their termination. 

Compliance with the Fair Work Act 2009 (Cth)

An employment agreement can also help ensure that you are complying with your obligations as an employer under the Fair Work Act 2009 (Cth). Your obligations as an employer under the National Employment Standards (‘NES’) will be set out in an employment agreement. 

3. What type of employment agreement is appropriate?

Types of employment agreements

The type of employment will determine the appropriate agreement for your situation. Types of employment in Australia include: 

  • full-time employment
  • part-time employment
  • casual employment
  • contracting (and sub-contracting) 
  • internships

You should choose an employment agreement based on work frequency and duration. . Another consideration is the tasks to be completed by the person. For example, if you have hired an employee who will work every Friday on a permanent basis, then a part-time employment agreement may be the most appropriate. If you are hiring the services of a self-employed tradesman, then an Independent Contractor Agreement or a Service Provider Agreement may be the most appropriate for that situation.  

Industry-specific agreements 

The appropriate employment agreement for your new employee will depend upon 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.  

4. How can we help?

Business Kitz has a range of employment agreement templates available for purchase including: 

  • Full-time Employment Agreement 
  • Part-time Employment Agreement 
  • Casual Employment Agreement
  • Independent Contractor Agreement 
  • Sub-contractor Agreement 
  • Unpaid Internship Deed

To purchase any of these agreements, go to businesskitz.com.au or email info@businesskitz.com.au. Industry-specific employment agreements for hair salons, restaurants, wholesale businesses and more can 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. 

Legal Advice

You should seek legal advice before signing an employment agreement. If you require legal advice on entering into any type of 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 may have been collected from relevant government websites or other sources and is subject to change. For the latest information regarding new or amended legislation or government policy, please refer to state and federal government websites. 

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