Employment Contracts: Your Questions Answered
Posted by: on 7 July 2015 in Human Capital Management
July 7 – by David Bates
Our latest Workforce Guardian from ADP webinar focussed on the important role well-written and Fair Work-compliant employment contracts play in protecting you and your business.
In this blog, we’ve provided answers to some of the questions we received after the webinar:
Q1 Do I Have to Issue Contracts to My Employees?
No. Current Australian employment laws don’t require employers to issue written contracts to employees.
Q2 So Should I Bother Issuing Contracts?
Yes! There are a number of very good reasons why every employee should be issued with an employment contract. Here are just three:
- Good contracts create clarity and certainty. A well-drafted contract ensures both you and your employees are on the same page when it comes to core terms and conditions of employment. This will help avoid misunderstandings and legal disputes.
- Most Modern Awards require certain terms to be recorded in writing, and the best place to do this is within a comprehensive employment contract. For example, under most Modern Awards, part-time employees must be issued with a written agreement about their hours of work when they start. It’s usually employers who don’t issue written contracts who fail to comply with this obligation, and then risk penalties of up to $51,000.
- Contracts allow you to impose reasonable obligations and expectations on your employees. This is useful because the Fair Work Act 2009 and Modern Awards provide your employees with a huge range of rights and entitlements. A good contract will help equalise the relationship by imposing some corresponding responsibilities on employees too.
Q3 Do My Contracts Override other Laws?
Generally, no. Contracts are ‘common law’ documents that are overridden by ‘statutory instruments’ such as the Fair Work Act 2009, Modern Awards, and the Paid Parental Leave Act 2010.
This means that if a contractual term is less generous to an employee than a statutory term, the statutory term will prevail. Accordingly, it’s very important to ensure your contracts are both consistent and compliant with all applicable laws.
You are, of course, always able to provide employees with contractual terms that are more generous than the statutory minimums.