What Employers Need to Know About Changing Employment Contracts

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There are many misconceptions regarding whether or not an employer can change the terms of a contract without an employee’s agreement or consent. In this post, we will discuss what employers need to know about changing employment contracts in both cases.

Is it legal to change employment contracts without an agreement?

In general, the answer is no, however, there are some exceptions. There may be some circumstances where changes to an employment contract can be affected by sending an email or utilising an external letter to demonstrate the changes that are being made to an employment contract. It is recommended, however, that any and all changes made to an employees’ contract including duties, location of work or any other change is only made after the employee has been consulted with in accordance with their Industry Award. Furthermore, it is essential that all changes are documented in writing where the date and time of the change is accurately captured.

Updating contracts: What to do when staff refuse to sign?

If you have correctly consulted with the employee, you can minimise the chance of employees refusing to sign a contract as they have likely been well informed and anticipate the changes to their contract, however, if an employee refuses to sign a contract it is first important to consult with the employee to see the reasoning behind why they don’t want to sign the agreement. If consulting the employee does not resolve the issues, you should consider seeking legal advice to understand what options are available to you in order to manage the employee whilst minimising the chances of a dispute.

Can you require an employee to sign?

An employer cannot require an employee to sign a contract, however, if the employee does not sign the contract, the employer may be able to terminate employment or change job requirements.

Termination of an employment contract

In accordance with the National Employment Standards and the Fair Work Act 2009 (Cth), employees can only be terminated via one of the following methods:

  1. Notice
  2. Redundancy
  3. Serious misconduct

Termination via notice involves performance managing the staff member that is underperforming as they: 

  • may not be carrying out their work to an appropriate standard;
  • may not be complying with their obligations under your organisation’s policies, or;
  • may be displaying disruptive or negative behaviour in the workplace. 

Before terminating an employee who is underperforming, the organisation must engage in performance management meetings and performance improvement plans; allowing the employee to respond to the complaints from the organisation and assisting them to make improvements. If the employer and organisation are finding that through these efforts the employee is still not improving and is continuing to underperform, then the organisation can provide relevant notice of termination to the employee under the National Employment Standards. 

If the employer does not require an employee’s job to be done anymore or becomes  bankrupt, the employer may consider making an employee redundant. This can also occur when new technology is introduced that may reduce the need for someone’s job, the business slows down or closes or there is a restructure in the business. In this case, it is important to make reference to the employee’s industry awards and the national employment standards on how to make the employee redundant. Requirements such as consultation of significant workplaces changes may be required before actioning a redundancy.

Do all employees need a contract

No, all employees do not need a contract, however, if an employee does not have a contract and is considered to be “at-will,” then the employer may be able to terminate employment or change job requirements at any time. Additionally, employers should make sure that their policies and procedures are in line with the Fair Work Act 2009 (Cth) . This will help protect employers from any legal action taken by employees who feel they have been treated unfairly. An employer cannot change the terms of a written contract without the employee’s agreement, unless there is a clause in the contract that allows for amendments or alterations under certain circumstances.

What is a standard employment contract?

A standard employment contract is an agreement between the employer and employee that outlines certain terms of their working relationship. It is usually written, however, it can also be verbal. There are two main types of employment contracts: written and verbal, however, even if there is no contract in place between an employer and employee, the parties may still have a “contract” based on their actions. A standard contract covers the employees rights, responsibilities and duties for the duration of their employment. 

Can employees be disqualified for refusing to accept new employment conditions?

No, employees cannot be disqualified for refusing to accept new employment conditions. If the employer wants to make changes to the employee’s job duties or working conditions, they must come up with a new contract that is fair for both parties. If this is not possible, then the employer may be able to terminate employment or change job requirements. If you are in this situation, we highly recommend speaking with a lawyer to understand the next steps forward. You can book in a free consultation with Legal Kitz who can assist you with this if needed. 

Do I need a contract for a casual employee?

When it comes to casual employee contracts, there is no set answer. It depends on the province or territory in which you reside. In general, however, contracts are not usually required for casual employees. This means that employers can change the terms of employment (e.g. hours, duties) at any time without getting agreement from the employee. We highly recommend that you have a written agreement in place as this provides better protection in care of a dispute as the terms and conditions of the arrangement are clearly set out.

How long does an employer have to issue a contract?

An employer has 30 days after the date of hire to issue a contract. If they do not issue a contract within this time, the employee is considered to be “at-will” and the employer may be able to terminate employment or change job requirements at any time. Additionally, employers should make sure that their policies and procedures are in line with the Fair Work Act 2009 (Cth). 

Can I write my own employment contract?

Yes, in some cases you can write your own employment contract, however, as you may not be aware of all the clauses that need to be included in a comprehensive agreement and could leave yourself open to potential dispute by having a poorly written agreement that does not protect the best interests of your business.  Business Kitz provides Australia’s highest quality legal document templates that are drafted by top tier solicitors, however, sold at a fraction of the cost. You can view our contract templates here.

Altering the terms of your contract

An employer can change the terms of an employee’s contract (e.g. hours, duties) after consulting with their employees. If an employee refuses to accept changes or amendments to their existing work duties/responsibilities, then employers cannot force them. They must propose new conditions and give the employee the opportunity to either agree or refuse. If the new conditions are not accepted, then employers may be able to terminate employment or change job requirements.

It is important for both employers and employees to understand their rights and responsibilities when it comes to changing employment contracts. By knowing what is allowed and what isn’t, everyone can avoid any potential issues in the future.

Amending agreements

When amending agreements it is important to be honest and to act in good faith. It is also important that the amendment does not change the nature of your employment relationship. If this happens, then your employee may be able to claim unfair dismissal if your employee is terminated for refusing the changes.

If an employer wants to make changes to a person’s job duties or working conditions, they must give the employee reasonable notice of these changes. This allows employees to adjust and makes it less likely that they will refuse the change and end up terminated as a result.

What are fundamental terms?

fundamental terms of a contract are the ‘core’ or essential terms of the contract that cannot be altered without giving rise to a breach.

  • Wage or salary
  • Hours of work
  • Leave and pay
  • Sick leave
  • Job title or position

There are also other fundamental clauses that should always be included in an employment agreement such as employee obligation, privacy, confidentiality and so on. You can see an extensive list of the clauses that are included in relevant agreements by visiting our contracts template page here.

Types of employment contracts

There are various types of employment contracts that suit relevant arrangements. Casual contracts are for employees who are not guaranteed any on-going expectation of work and are utilised on an as needed basis. Part time employees are employees who do not work a full-time week, however, they will be working consistent hours that are guaranteed and full-time contracts are for staff who are generally working 38 hours per week and are kept on as permanent staff. Some staff can also be brought on as a fixed term employee where they may be covering for someone who has gone on maternity leave for example. Each employment relationship has a different contract as under the National Employment Standards and the applicable Award, there are different entitlements for each type of contract.

Casual employment contracts

A casual employment contract is an agreement between an employer and employee that is not permanent. It is often used for short-term or temporary work, such as in the case of seasonal work.

Fixed-term employment contracts

A fixed-term employment contract is an agreement between an employer and employee that states the specific dates or length of time that the person will be working. This type of contract can be used for a variety of reasons, such as to cover a maternity leave or when a permanent employee is on vacation.

Independent contractor

An independent contractor is an individual who provides services to another person or company. They are not considered an employee of the company, and therefore do not have the same rights and protections as employees do.

Part-time employment contracts

A part-time employment contract is an agreement between an employer and employee that states the number of hours per week that the person will be working. This type of contract can be used for a variety of reasons, such as to cover a maternity leave or when a permanent employee is on vacation.

Full-time employment contracts

A full-time employment contract is an agreement between an employer and employee that states the number of hours per week that the person will be working. This type of contract is often used for permanent employees who work a standard 38-hour workweek.

If you need help with your legal documentation templates, you can book a free consultation with Business Kitz by clicking here or calling us on 1300 988 954.

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