Hiring hot topics: what you need to know about employment contracts
So you’ve found the right person for the job, made them an offer and they’re keen to come on board. The next step is sending them an employment contract. But what should you put in it and what are the legal requirements?
An employment contract sets out the terms and conditions of employment. We’ve asked an employment lawyer about what it needs to include.
Choosing the right employment contract
Andrew Jewell, Principal Lawyer at Jewell Hancock Employment Lawyers, says there’s no legal requirement to provide a written contract. But, employers are required to provide information regarding pay and entitlements in writing.
“It is definitely best practice to set our terms and conditions in a considered legal document,” he says.
The type of employment contract you choose depends on the employment. Are you hiring for a casual, permanent and fixed-term role?
Jewell explains that casual contracts generally involve an ad hoc engagement where hours and pay change from week to week, but have a set hourly rate. They also have short termination periods, which can be as little as a day.
“Permanent employment contracts are the most common and involve an ongoing employment relationship, usually subject to a probationary period and right of termination, but otherwise for set hours – full time or part time – and a set rate of pay,” says Jewell.
Fixed-term contracts are similar to permanent contracts, but have a specified end date. They may be used for employees who'll cover someone’s parental leave, for example, or who'll work on a specific project of a set duration. From 6 December 2023, a fixed-term contract can’t be for longer than two years. This includes any extensions or renewals.
“They generally cannot be ended by either party before the end date,” says Jewell. “If there is a right of termination, then they are ‘maximum term contracts’.”
What are the mandatory and optional inclusions?
Jewell says the most common terms that must be included in an employment contract are:
remuneration
hours of work
any allowances or loadings
information about entitlements, such as leave
rights and processes involving dismissal or resignation
He says some optional additional terms might include:
expectations around duties and performance
obligations regarding performance and conduct
future increases in pay
obligations after employment, such as regarding confidential information
Where can you go for help?
If you have any questions about an employment contract before you send one to a new employee, Jewell suggests seeking legal advice from an employment lawyer.
The Fair Work Ombudsman website includes information about employment contracts and legal minimum requirements. The Federal Government’s Employment Contract Tool is designed to help small business owners build an employment contract for an employee under Australia's Fair Work System, that’s tailored to your business needs.
Employment contracts are important documents that outline the terms and conditions of employment. While they vary depending on whether you’re hiring for a casual, permanent or fixed-term role, they all have legal requirements you need to include before you send them off to be signed.
Information provided in this article is general only and it does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including the appropriate legal advice) on whether it is suitable for your circumstances.