Employment Contracts – Do You Need Them?

We’ve been asked on many occasions, “we’re a small business; why do we need an employment contract for employees?”.  Before we answer, let’s confirm what an employment contract is:

An employment contract is an agreement between an employer and employee that sets out terms and conditions of employment (www.fairwork.gov.au/awards-and-agreements/employment-contracts).

The contract sets out in plain English the conditions both you and the employee have agreed upon for them to work within your business. It is always recommended that employees are provided with an employment contract, preferably before their first day of work, to ensure everyone is clear on the arrangements.

For both the Employer and the Employee: contract sets the parameters of the employment relationship and provides clarity in numerous areas:

· Salary/hourly rate and any promises for increases or bonuses.

· Type of employment, e.g., full time, part-time or casual, and days/hours of work.

· Duties to be completed within the role – expectations are clear.

· Notice of termination required.

· Various other things that are important to clarify before commencement, e.g., vaccination.

· Inclusion of a probation period at the commencement of the employment relationship gives security to both parties if things don’t work out in the initial weeks.

As the employer, you have security in knowing that the employee is fully aware of their obligations and has agreed to comply with the stated terms.

For the employee, a contract provides them with the security they’re working for a professional business that has clearly defined its obligations and agreements on all terms of employment. It then allows them to concentrate on learning the role and getting to know their new team members.

There are quite a few laws governing the employee-employer relationship; having legally binding employment contracts avoids misunderstanding and gives both parties absolute clarity about both your rights and responsibilities and for the employee, their rights, and responsibilities.

It would be best if you did not let the formality of an employment contract be a headache or be pushed into the too hard basket, seek some advice and value the peace of mind when everything is in place. Please remember that a contract does not replace the Fair Work Information Statement and Casual Employment Information Statement that needs to be provided to staff.

Need some assistance? Please contact Prime Practice HR Solutions.