Does your employment contract have these critical terms?

A lot of employment contracts cross our desk. Many are poorly drafted, and many miss critical terms that quietly expose the employer to legal, financial and intellectual property risk.

Australian employment law is complex and changes often. A well drafted contract is one of the cheapest ways to reduce that risk. Here are the terms a modern contract should cover.

Why a well drafted contract matters

Most employers must comply with the National Employment Standards, other parts of the Fair Work Act, relevant state laws and any applicable modern award or enterprise agreement. Get it wrong and the employer, its directors and the staff involved can face liability, penalties and even criminal prosecution.

A good contract reduces that risk, cuts disputes and the cost that comes with them, and protects your critical information, IP and client relationships. Engaging a law firm also brings the comfort of mandatory professional indemnity insurance.

The terms to check

To see whether your template needs work, check whether it deals with:

• pay transparency obligations under the Fair Work Act;
• managing the risk of damages for psychiatric injury after Elisha v Vision Australia;
• excluding implied terms that limit your ability to manage and to amend policies;
• modern award coverage, classification, and a valid set-off clause where pay is above award;
• background checks and disclosure of pre-existing injuries;
• the right to vary duties, position, pay and location, and to avoid an implied reasonable-notice term;
• hours of work drafted for the right to disconnect;
• the legal status of workplace policies and the right to amend them;
• confidential information and IP protection;
• surveillance consents and medical examinations; and
• tailored post-employment restraints.

Restraints have to be tailored

Clauses that protect against competition and against taking your staff, clients, suppliers or patients must be drafted specifically for your business to maximise enforceability. Generic wording often fails when it matters most.

Do casuals need a contract?

Not by law, but it is strongly recommended. A written contract records the terms, protects your interests, and helps establish that the relationship is genuinely casual if that is ever challenged.

This article is general information, not legal advice. For advice on your situation, ask Lawlux or talk to a Lawlux lawyer.

Dave Burnton

Managing Principal · Employment & IR

Dave is Lawlux's Managing Principal and leads the employment and industrial relations practice.

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