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Employment Contracts - The Who, What and Why
Employment contracts are an integral part of the employment relationship. These legally binding documents set out the terms and conditions of employment, including the employee's rights and obligations and the employer's responsibilities. The Fair Work Act 2009 ("the Act") sets out the minimum terms and conditions of employment that must be included in all employment contracts in Australia.
What is the Fair Work Act 2009?
The Act is the primary legislation governing employment in Australia. It sets out the minimum terms and conditions of employment, including minimum wages, hours of work, leave entitlements and termination of employment. The Act also provides for the establishment of the Fair Work Commission, which is responsible for regulating employment matters and resolving disputes between employers and employees.
What must be included in an employment contract under the Fair Work Act 2009?
Under the Act, all employment contracts must include the following minimum terms and conditions of employment:
- Type of employment – an employment contract must specify whether the employment is full-time, part-time, or casual.
- Start date - the expected commencement of employment.
- Hours of work - for full-time and part-time employees, an employment contract must set out the ordinary hours of work and any overtime or penalty rates that apply. For casual employees, an employment contract must set out the rate of pay.
- Remuneration – an employment contract must detail the employee's rate of pay, including any allowances, loading or penalty rates that apply.
- Leave entitlements – including the employee's entitlements to annual leave, personal/carer's leave, compassionate leave and any other leave entitlements (where applicable).
- Termination of employment – including when and how a party can terminate the employment contract and the applicable notice periods.
- Redundancy – information detailing the employee's entitlements in the event of redundancy.
- Superannuation – an employment contract must contain the employer's obligations regarding superannuation contributions.
It's important to note that the minimum terms and conditions of employment under the Act are just that: the minimum. Employers must ensure that their employment contracts comply with the Act and any relevant awards or enterprise agreements. Employers may also choose to include additional terms and conditions that are more generous than those set out in the Act, modern award or enterprise agreement.
What happens if an employment contract does not comply with the Act?
If an employment contract does not comply with the minimum terms and conditions set out in the Act, an employee may be able to make a claim for underpayment or other breaches of employment law. The Fair Work Ombudsman is responsible for enforcing compliance with the Act and can investigate and take enforcement action against employers who breach their obligations.
I'm an employer - what do I need to do?
Employment contracts provide a foundation for the employment relationship. Inadequate or poorly drafted employment contracts may result in uncertainty about the rights, responsibilities and obligations of both employers and employees. Further, employers may open themselves up to liability if their employment contracts fail to meet the minimum standards prescribed by the Act.
Employment law is constantly changing, so employers should carry out regular reviews of their employment contracts to ensure that they remain up to date and comply with the prescribed minimum standards. Our experienced employment law team can assist employers in drafting all employment related documents, from contracts through to policies and procedures.
I'm an employee - what about me?
Employees should review their employment contracts carefully and seek advice if they believe their employer is not complying with their obligations under the Act. Our experienced employment lawyers can assist you in determining whether your employer is meeting all of its obligations under the Act and, if not, help you to engage with your employer to recover missing entitlements.