Employment Contracts

An employment contract is an agreement between an employer and employee which sets out the terms and conditions of an employee’s employment. It is important for both an employer and employee to have a clear understanding of the terms and conditions of the employee’s employment to avoid disputes from arising.

Does an employment contract have to be in writing?

No. An employment contract can be made verbally or it can be made in writing.

It can also be a mixture of a verbal agreement and a written agreement. The signing of a written employment contract, however, will assist in establishing that an employment relationship has been created.

How is a valid employment contract created?

An employment contract will be valid and legally enforceable where:

• an employer and employee have reached an agreement about the terms of the contract;
• the employment contract provides for the giving of ‘consideration’ by the employer to the employee (usually monetary payment/wages/salary);
• it is intended that the employment contract is legally enforceable;
• the employment contract does not contain terms that are illegal.

What should be detailed in an employment contract?

The contents of an employment contract will vary depending on the nature of the work to be performed by an employee. Generally, however, a standard employment contract will include:

• the parties to the contract;
• a description of the role and duties of the employee;
• the place and hours of work;
• commencement date and period of probation;
• the basis upon which the employee is engaged and for how many hours;
• remuneration – the amount and frequency with which an employee will be paid;
• leave entitlements;
• confidentiality and intellectual property; and
• notice periods in respect of termination of employment.

When should an employer give an employee an employment contract?

An employer should provide a person with a copy of the employment contract when they offer them employment so the employee can consider the terms and conditions of employment before accepting the position.

What is the effect of the National Employment Standards on an employment contract?

The National Employment Standards (‘NES’) are ten minimum employment entitlements that must be provided to all employees. An employment contract cannot provide for less than the minimum employment entitlements set out in the NES. A written employment contract does not need to explicitly include the NES clauses.

What is the impact of modern awards and enterprise bargaining agreements on a contract?

A modern award and enterprise bargaining agreement are separate legal instruments to an employment contract.

While an employer and employee may be bound by a modern award or enterprise bargaining agreement, each term of that award or agreement is not necessarily a term of a valid employment contract.

As with the NES, modern awards set out minimum employment standards. An employment contract cannot provide for less than these minimum standards but it may contain conditions that are more beneficial to an employee.  

Are policies and procedures included as part of a contract?

Generally, policies and procedures will be considered to have contractual force if they are referenced in a written employment contract or letter of offer. Where the contract is a verbal contract, an employee may be given a policy handbook or manual and asked to sign a receipt. This will generally indicate an acceptance of its terms.

Can a contract be varied or substituted?

Yes.

An employer and employee may agree to change the terms of the employee’s employment at any time provided this is an agreement made by both parties. In other words, an employer cannot vary the terms of an employee’s employment unilaterally.

Where there is a significant change to the terms of an employee’s duties, this may constitute a substitution of the original employment contract with a new employment contract. Where this occurs, the terms of the original employment contract may no longer be applicable.

Get help

Employment contracts can be difficult and complex depending on the nature of the employment. Should you wish to obtain legal advice in relation to an employment contract you should contact a Gilshenan & Luton employment lawyer who will assist you with your matter.