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Estimated Time to Build: 18 - 33 Minutes
Jurisdiction: Australia Wide
This Employment Contract is also not suitable for Employees in Western Australia who are employed by:
This Employment Contract is suitable for employees in Western Australia employed by a constitutional corporation (a Pty Ltd *or* Ltd company).
Download the Employment Contract Checklist
Sample is not available for this document.
This employment contract is suitable for all employees of a “national system employer”. You will be a national system employer if you are:
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Jurisdiction
While most employers, as “national system employers”, will be covered by the Fair Work Act 2009 (Cth), there will still be state legislation that applies to long service leave entitlements.
Minimum Conditions
The minimum conditions of employment for employees who are employed by a national system employer are contained in the Fair Work Act 2009 (Cth). The Fair Work Act 2009 (Cth) sets out the National Employment Standards (“NES”) (eg. maximum weekly hours, annual leave, long service leave, superannuation contributions, Fair Work Information Statement and Casual Employment Information Statement.) For a full list of the NES go to www.fairwork.gov.au and search for National Employment Standards.
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To determine whether you need to use the employment contract or independent contractor agreement, you will need to determine whether the person you are employing/engaging is an employee or independent contractor.
The following table depicts some common characteristics of an employee and independent contractor and will assist you to make this decision:
| Employee | Independent Contractor |
|
|
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No, you cannot offer an employee less than the minimum entitlements under the National Employment Standards (“NES”), or any other legislative instrument (such as an applicable Award).
All minimum entitlements under the NES cannot be displaced and will override any offer which is less than the minimum entitlements.
For example, because the NES provide for 10 days’ personal/carer’s leave, you cannot offer an employee 8 days’ personal/carer’s leave. You must comply with these minimum entitlements even if you are offering an employee more money.
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Yes, there is nothing that prevents you from offering an employee terms and conditions that are better than the minimum conditions.
This employment contract allows you the flexibility to offer an employee an employment contract that best suits the individual circumstances of your business.
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While most employers, as “national system employers”, will be covered by the Fair Work Act 2009 (Cth), there will still be state legislation that applies to long service leave entitlements.
You should choose the state or territory in which your business operates. For example, if your business operates in Hobart, then choose Tasmania.
Need help with jurisdiction and minimum conditions of employment?
For more information on this subject, you should contact the Fair Work Ombudsman on 13 13 94 or your local employer organisation.
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Yes, you can use this employment contract for existing employees. However, you need to remember that an existing employee will already have an employment contract (even if there is nothing in writing, an employment contract can be oral or partly written and partly oral) and this employment contract may be significantly different from an employee’s current employment contract.
It is prudent for an employer to have an employment contract with each employee to clarify the terms and conditions of an employee’s employment.
It is also prudent to regularly review your employment contracts to ensure they are not out of date.
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It is important to have a written employment contract for each employee to clearly set out the rights and obligations of the parties. An employment contract will also assist should there be any dispute in relation to an employee’s terms and conditions of employment. Proving what was agreed is often difficult if the terms and conditions were not written down.
While the minimum conditions of employment are provided for by the National Employment Standards (“NES”) (and other industrial instruments such as Awards), these legal instruments do not cover all of the issues you would want to address with an employee. This employment contract allows you to address a wide range of matters pertaining to the employment relationship which are not addressed by the NES or other industrial instruments. These include:
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This is a particular area of concern for many employers. For this reason, we have included a clause relating to sun protection in the employment contract. This clause provides that:
“Unless there is a medical direction otherwise, the Employee is required (at the Employee’s own cost) while outside to wear proper protection from the sun, including sunscreen lotion, sunhat and sunglasses.”
This will also protect you as an employer from any potential claim that could be made by an employee at a later stage.
However, if this employment contract is being prepared for an employee who will be frequently exposed to the sun, it is important to remember that as an employer you have obligations under health and safety legislation and it may be prudent to consider providing sunscreen lotion or reimbursing employees who purchase sunscreen lotion.
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Under the National Employment Standards (“NES”) all employees are entitled to 4 weeks of annual leave each year. This entitlement accrues progressively during a year of service according to an employee’s ordinary hours of work, and accumulates from year to year.
Part-time employees are entitled to annual leave on a pro-rata basis.
This employment contract has been drafted to comply with the requirements under the NES.
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Put the Company name in the "Surname" area:
Example: "Surname (or Company or Business Name or Partnership Name)": Games Galore Pty Ltd
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This is not an issue, many businesses trade under a business name.
Put the business name in the "Surname" section.
Example: “Surname (or Company or Business Name or Partnership Name)”: Games Galore
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If you trade as a Partnership then put the business name in the “Surname” section.
Example: "Surname (or Company or Business Name or Partnership Name)": Smith & Weston Dentists
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If you have an ACN number then it must be inserted in this section so it appears in the employment contract.
Simply put in the text box provided, the ACN number (don't forget to put in "ACN").
Example: ACN 008 379 545
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If you as the employer have an ABN number then it must be inserted in this section so it appears in the employment contract.
Simply put in the text box provided, the ABN number (don't forget to put in "ABN" ).
Example: ABN 94 986 504 536
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You don't need to pay state duty (such as stamp duty) for an employment contract. This is an agreement between an employer and an employee.
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No, an employment contract is an individual contract that is between an employer and a single employee.
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The value of a family trust is that you don't have to employ your family. You can make distributions out of the trust each year - without there being any employment relationship.
However, there are many reasons for wanting to pay your family as employees. One reason is that you can contribute directly to their superannuation. You can also get them to actually do some work in the family business.
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A casual employee is an employee who is engaged for irregular periods of work at an employer's discretion. Casual employees are usually paid by the hour and each shift worked is a separate engagement. For this reason, a casual employee has no guarantee of ongoing work.
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Yes, you have to pay a casual employee more than a full-time or part-time employee who is doing comparable work.
If a casual employee is covered by an Award, then this will set out the “casual loading” that is to be paid to a casual employee.
If a casual employee is not covered by an Award, then for the year 2023/2024 the casual employee is entitled to a minimum hourly wage of $23.23 plus a casual loading of 25%.
The additional loading provided to casual employees compensates them for not receiving entitlements such as annual leave, personal/carer’s leave, public holidays, severance or redundancy pay.
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Casual employees can be covered by Awards.
If a casual employee is covered by an Award, you must carefully check the Award as it is likely to contain specific obligations in relation to the employment of casual employees
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Generally, an employee will be a full-time employee if the employee works for 38 hours per week or more. The Fair Work Act 2009 (Cth) provides that the ordinary hours of work for a full-time employee are 38.
A full-time employee is provided with entitlements such as annual leave, personal/carer’s leave, public holidays, redundancy pay and long service leave.
On the other hand, part-time employees are employees employed to work less than full-time hours (being less than 38 hours per week) but they usually have the same hours each week.
Part-time employees have the same entitlements as full-time employees albeit on a pro-rata basis.
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DO NOT USE THIS CONTRACT WHERE THE PERSON IS BEING ENGAGED AS AN INDEPENDENT CONTRACTOR.
The distinction between independent contractors (or sub-contractors) and employees is important. It determines whether you will be liable for such obligations as making PAYG tax deductions, superannuation contributions and meeting minimum conditions of employment set out in the National Employment Standards (“NES”) and any relevant Award.
A worker will not be an independent contractor simply because he or she is designated as such. Whether a person is an employee or an independent contractor depends upon a range of factors.
The following table describes some common characteristics which distinguish an employment relationship from an independent contract.
| Employee | Independent Contractor |
|
|
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What is the difference between full-time, part-time and casual employment?
Employees are engaged on either a permanent or casual basis.
Permanent work can be either full-time or part-time.
Permanent full-time workers are usually required to work 38 hours a week (plus “reasonable additional hours”). They are entitled to the minimum conditions set by the National Employment Standards (“NES”), any applicable Award, any applicable Enterprise Agreement, and any applicable Federal or State industrial laws. Full-time employment can usually be terminated by the employer or employee giving notice.
Permanent part-time workers generally receive the same conditions as full-time employees except that wage and leave entitlements are provided on a pro-rated basis relative to the hours worked. For example, a part-time employee will be paid the same hourly rate as a full-time employee but for fewer hours.
Permanent part-time employees are entitled to personal/carer’s leave and annual leave. Both permanent full-time and permanent part-time employees are subject to the same notice of termination provisions.
Casual workers are employed on an hourly basis and actual hours may range from the minimum engagement period up to the same hours as a permanent full-time employee. A casual employee is entitled to be paid an extra loading to compensate for the fact that casuals are not entitled to paid personal/carer’s leave or annual leave. A casual employee who is employed on a regular and systematic basis (for example, according to a predictable pattern of shifts), and who consequently has a reasonable expectation of continuing work may nevertheless be entitled to protection from unfair dismissal.
As an employer, you are responsible to collect a number of taxes such as: PAYG income tax deductions, and the superannuation guarantee levy.
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An independent contractor is not an employee and is usually responsible for his or her own taxation arrangements and insurance.
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Employers must give every new employee a copy of the Fair Work Information Statement (FWIS) before, or as soon as possible after, they start their new job. You can download a copy of the relevant Fair Work Information Statement from https://www.fairwork.gov.au/employment-conditions/information-statements/fair-work-information-statement
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One of the minimum National Employment Standards is “Offers and requests to convert from casual to permanent employment”.
From the Fair Work website:
“Casual employees who have worked for their employer for 12 months with a regular pattern of hours need to be offered the option to convert to full-time or part-time (permanent) employment. Certain eligibility requirements need to be met for this to occur.
Casual employees may be able to request that their employer converts their employment to full-time or part-time (permanent) in some circumstances.”
For more information, go to www.fairwork.gov.au
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Employers must give every new employee a copy of the Fair Work Information Statement (FWIS) before, or as soon as possible after, they start their new job. You can download a copy of the relevant Fair Work Information Statement from https://www.fairwork.gov.au/employment-conditions/information-statements/fair-work-information-statement
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The Fair Work Act states that an employer must not request or require a full-time employee to work more than 38 hours in a week unless the additional hours are reasonable.
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The Start Date is the day that the employee is expected to start the work.
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Employers must give every new employee a copy of the Fair Work Information Statement (FWIS) before, or as soon as possible after, they start their new job. You can download a copy of the relevant Fair Work Information Statement from https://www.fairwork.gov.au/employment-conditions/information-statements/fair-work-information-statement
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Simply enter the time you want the employee to start and finish work in these days only.
Example.
Thursday
Start Time 12.30 p.m.
Finish Time 8.00 p.m.
Saturday
Start Time 9.00 a.m.
Finish Time 5.00 a.m.
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A guarantee of annual earnings is an understanding given by an employer to an employee which guarantees that the employee will earn above the high income threshold.
This is important because an Award will not apply to an employee whose income is above the high income threshold where that amount is guaranteed.
You should include a guarantee of annual earnings clause for an employee who earns over $167,500 noting that this is the figure for the 2023/2024 financial year and this figure is increased annually.
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Modern Awards regulate minimum conditions. Check the Fair Work Australia website, or seek advice from an employer organisation, if you are unsure of the Award that applies in your industry.
QUESTION: Where can I find a copy of the Modern Award?
ANSWER: The Fair Work Australia website
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A contract of employment is the bargain or arrangement between you and your employee. The employee provides the labour or work in return for payment from you. The contract may be oral or written or partly oral and written. It is best to put agreements in writing.
In the absence of written terms, the law will imply some basic terms into the employment contract, such as an employee’s duty to provide faithful service in return for payment. If a dispute arises in an employment relationship where there are no written terms, a Court may be required to imply terms based on the Court’s best guess about what the parties’ agreed, so it is wisest to record the agreement in writing to avoid expensive arguments at a later time.
Individual contracts cannot override rights and obligations in the National Employment Standards (“NES”), or in any applicable Modern Award or Enterprise Agreement.
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No. Many white collar occupations are also subject to Modern Awards. However even where an Award covers an occupational group, it is possible for an employer and employee to agree that the Award will not apply to a “High Income Employee”, if the employer provides a guarantee of annual earnings. This contract allows you to provide an employee with a guarantee of annual earnings.
A High Income employee is an employee who earns over $167,500 for the 2023/2024 financial year (although this figure is increased annually).
Most executives and High Income Earners are not employed under Awards.
A written contract of employment is generally the primary source of legal obligations for high income employees.
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This employment contract is not a Workplace Agreement or Enterprise Agreement.
What is the difference between a Workplace Agreement and an employment contract?
A Workplace Agreement (made under the former Workplace Relations Act) and an Enterprise Agreement (made under the current Fair Work Act 2009 (Cth)) are Collective Agreements made by employers in respect of many employees. These Collective Agreements must be approved by Fair Work Australia, and may (when approved) override Awards. This employment contract is an individual agreement binding you and your employee, and it will not override any applicable Awards.
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If you pay your employees a higher rate of remuneration which is designed to fully compensate them for all overtime payments, penalty rates, allowances and loadings then you should include a set off clause. This will protect you should an employee seek to recover these amounts at a later stage.
You will be given the opportunity to include a set off clause soon.
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The job title should correspond to the work which an employee will be required to complete under this employment contract.
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An employee whose primary duties are to serve customers in a shop will be a "shop assistant" and an employee whose primary duties are of a secretarial nature, will be a "secretary". Your employee may be a:
Salesperson
Boiler maker
Lawyer
Software designer
System Development Manager
Web Master
Associate Secretary
Office Cadet
Greengrocer
Hairdresser
Store person.
You decide.
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In this employment contract, Salary is a term used to describe a pre-determined sum of money that an employee is to be paid for working a set period - usually one year.
For example: If the employee receives $45,000 per year, then this is a "Salary".
If the employee receives $25.50 per hour, then this is payment "By Hourly Rate".
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Casual employees are paid "By Hourly Rate".
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It is often much simpler (and more secure) for an employer to pay wages or salary directly into the employee's bank account.
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This employment contract does not provide for leave loading.
So I don't have to pay Leave Loading?
There is no mandatory holiday leave loading under the National Employment Standards (“NES”), however many Awards and Enterprise Agreements provide for a leave loading.
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These amounts don’t include any salary packaging. Salary packaging arrangements should be made in writing, from time to time, as required.
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These amounts don’t include allowances. An applicable Award may require payment of allowances, such as clothing, meal, vehicle or remote area allowances.
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A casual employee is paid a given percentage of pay more than a permanent employee for comparable work (normally at least 25%).
This is because a casual employee does not receive permanent employment entitlements such as annual leave, personal/carer’s leave, minimum notice and redundancy pay.
Casual leave loadings are set out in Awards.
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No. This hourly rate is "net" of superannuation.
There is a legal requirement to pay the Superannuation Guarantee Levy. You cannot contract out of this obligation.
Therefore, if you have worked out the hourly rate INCLUSIVE of this compulsory superannuation then you need to work out the net hourly rate EXCLUSIVE of superannuation. Include the hourly rate exclusive of superannuation here.
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In this employment contract, salary is a term used to describe an agreed amount which an employee is to be paid for working a set period of time - usually one year.
It can be expressed as a fixed regular payment made on a monthly basis to an employee, or as an annual salary.
If an employee is covered by an Award you will need to review the Award as this contains minimum wages.
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By including an annual salary you are not promising that you will continue to employ an employee for a full year, if you include termination provisions in the contract.
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No it doesn't include superannuation. This salary is "net" of superannuation.
There is a legal requirement to pay the Superannuation Guarantee Levy. You cannot contract out of this obligation.
Therefore if you have worked out the salary INCLUSIVE of this compulsory superannuation then you need to work out the net salary EXCLUSIVE of superannuation. Include the salary exclusive of superannuation here.
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In professional practices employees are usually paid monthly.
Some businesses pay weekly.
Many people are paid fortnightly.
There is a lot of work in doing the "payroll". You have to work out the compulsory superannuation; payroll tax (if you are big enough), annual leave entitlements, personal/carer’s leave entitlements, and so on.
So there is less paper work if you opt to pay monthly.
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1. In Arrears:
“In arrears” means that you pay an employee after they have completed the work for that time period. The period of pay in arrears depends on whether you pay an employee weekly, fortnightly or monthly. The Fair Work Act 2009 (Cth) requires that employers pay employees “at least monthly”.
For example: if you choose arrears and the option of paying an employee monthly, the employee is paid one month after they started work for that month and at the end of every month after that initial pay packet.
2. In advance:
“In advance” means that you pay the employee at the start of the pay period before they have done any work in that pay period.
3. Half in arrears and half in advance
An example of paying half in arrears and half in advance is when an employer pays salary for a whole calendar month on the 15th of the month.
4. WHICH IS BEST?
It is generally easier to pay ‘in arrears’. This is because you can calculate leave entitlements more accurately once time has been served.
Awards and Enterprise Agreements may stipulate the frequency and method of payment. If so, you must comply with the Award or Enterprise Agreement.
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Yes, it is.
Commission or bonus payments are a reward for achieving certain targets/goals that are set by an employer.
It is paid in addition to the previously agreed remuneration given by the base salary or hourly rate. It is possible to incorporate both bonuses and commission into the same document.
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We do not recommend that you use this employment contract for arrangements involving payment by 100% commission or 100% bonus.
This employment contract automatically applies the minimum conditions for the work they do for you. Consequently, any bonus or commission based payment is dependent upon an employee receiving the minimum allowable wage and conditions for the hours worked.
If you wish to pay commission/bonus only, please contact Law Central Legal on (08) 9476 4999.
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This employment contract gives you the flexibility to create performance based incentives for your employee to achieve. These incentives normally take the form of either:
- a bonus, which is an agreed sum of money that an employee will receive if they reach a given target. The target could relate to sales figures, customer satisfaction surveys and even reduction in injury rates; or
- a commission, which is an agreed percentage of a sales figure that an employee will receive after a sales target is reached.
Your ability to enhance employees’ productivity is only limited by your imagination.
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There is a requirement to pay the compulsory superannuation levy on commission and/or bonuses as well as on salary.
Superannuation can be accounted for in two ways:
1) you can make the commission/bonus payment inclusive of superannuation, whereby you are required to calculate the component of the commission/bonus that must be paid to a superannuation fund; or
2) you can make the payment of commission/bonus exclusive of the superannuation guarantee and thereby you will be required to pay the superannuation guarantee on top of the commission/bonus paid.
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If you pay your employees a higher rate of remuneration which is designed to fully compensate them for all overtime payments, penalty rates, allowances and loadings then you should include a set off clause. This will protect you should an employee seek to recover these amounts at a later stage.
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Add any duties that are unusual or that are an essential part of the job.
Examples:
-to develop the client base; or
-to act as salesperson in the menswear department and undertake cleaning duties where required.
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DO I NEED TO PUT IN THE OBVIOUS DUTIES?
There are certain implied duties for employees under the common law. These do not have to be specified in the employment contract. An example is the implied duty of employees to be loyal to their employer.
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The employment contract automatically includes these standard duties. We believe you need them for your protection (by removing the potential for ambiguity) and to ensure all employees are working towards the goals of the company.
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No, you don't.
If you do not add a further responsibility description, only the 'default' list as displayed will be incorporated into the final document.
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Duties implied by law into employment contracts can protect the employer's interests when an employee develops/invents a new product or system whilst using the employer’s business resources. Nevertheless, it is wise to include express provisions in the contract.
In the case of Spencer Industries Pty Limited v Collins a Court found that an employee and not the employer owned an invention related to the employer’s tyre re-treading business. In deciding in favour of the employee the Court referred to the lack of any express provision in the written contract that defined with precision, the scope of the employee's duties in respect of inventions.
Consequently, you should list as many duties and responsibilities as are reasonably contemplated to be within the scope and course of an employee's employment.
Given an employee’s particular technical skills, seniority and nature of employment, it may be appropriate to include a duty/responsibility to consider the development of new products, techniques or systems in the course of their employment.
Don't necessarily limit ongoing duties/responsibilities to a particular duty such as sales if you envisage a need to require an employee to accommodate changes to the role over time.
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The Employee will:
1. Mow the lawn for the entire tennis club.
2. Purchase and setup a flower bed next to the main entrance.
3. Maintain the children's recreational area free from rubbish, in particular sharps and needles.
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You can stipulate things that your employee must not do.
There are already plenty of these in the document, including that an employee must:
"refrain from acting or giving the appearance of acting contrary to the Employer’s best interest."
If you have other requirements include them here. Be mindful that it is against discrimination laws to include matters relating to a person’s religion, marital status, sexual preference, family responsibilities and other protected characteristics.
It would be discriminatory, for example, to insist that an employee must not enter into a de facto relationship while an employee.
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For your protection and security your connection to www.lawcentral.com.au times out every 10 minutes if you haven't pressed "next" or had some activity. So, to save you time, you may want to consider typing up and saving on your own computer (say for example in word or notepad) what you want to say in the document before you start to build it. That way, if your session does expire for non-activity, you will still have a copy of your text.
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It is not necessary to include additional conduct requirements, but if your business has special requirements, such as a need to observe a particular dress code, those requirements can be added here.
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This very important issue is dealt with in a separate question, later in this employment contract.
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The employee must ensure that proper safety protective equipment as set out in Work Health and Safety standards is worn at all times.
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For your protection and security your connection to www.lawcentral.com.au times out every 10 minutes if you haven't pressed "next" or had some activity. So, to save you time, you may want to consider typing up and saving on your own computer (say for example in word or notepad) what you want to say in the document before you start to build it. That way, if your session does expire for non-activity, you will still have a copy of your text.
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A notice period is the amount of time the parties agree to give if they intend to terminate the employment.
Where an employee’s employment is subject to an industrial instrument, such as an Award or an Enterprise Agreement, the Notice Period is usually specified in that instrument. There are also minimum notice periods prescribed by the Fair Work Act 2009 (Cth).
Subject to these industrial instruments, it is common to have a notice period of 4 weeks.
However, if an employee is a very important person with lots of secrets about your business (e.g. CEO) then the termination is often around 3 months. (This is where “garden leave” came from. You continue to pay them and they stay at home for that 3 month period).
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This employment contract contains a clause which allows you to terminate an employee’s employment without notice for serious misconduct.
However, termination of an employee's employment is a very complex area of law. An employee should not have their employment terminated for reasons of misconduct without being given the opportunity to hear and answer the allegation, unless the circumstances are such that an employer cannot be reasonably expected to provide such an opportunity.
The onus of proving that the reason for the termination was valid rests with an employer.
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A casual employee’s employment can still be terminated for serious misconduct. A casual employee’s employment can also be terminated by giving notice. In this contract, you can terminate a casual employee’s employment by giving as little as 1 hour of notice.
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The purpose of a probationary period is to allow you to assess an employee’s suitability for the position. The effect of a probationary period is to make termination of employment easier by reducing the period of notice required.
It allows an employer to decide at the end of the probationary period whether to continue the employment of an employee.
If an employer parts ways with an employee during the probationary period, then they can do so by giving each other one week of notice.
For example, if there is a three month probationary period then anytime in those three months, the employer or employee can terminate the employment relationship without ‘usually’ needing to give a reason. Only one week of notice is required. An employer can pay an employee in lieu for that week and require the employee to leave immediately.
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Generally, a probationary period should not be longer than six months. If the probationary period is more than six months, it must be reasonable (and this would usually only be reasonable for a senior employee).
It is important to remember that the Fair Work Act 2009 (Cth) contains a six month minimum employment period and employees who have not completed six months of employment cannot bring an unfair dismissal claim.
Further, don’t wait for the last day of the probationary period to terminate an employee’s employment. You want to make sure you terminate an employee’s employment within the six month probationary period/minimum employment period. Remember you still have to be “fair” and not breach any laws such as discrimination legislation.
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Probationary periods are generally not appropriate for existing employees.
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A probationary period is usually between 3 – 6 months depending on the complexity and seniority of the position.
Generally, the more complex and senior the position, the longer the probationary period.
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A confidentiality clause seeks to protect secret information that an employee has acquired during the course of their employment.
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To protect your business, a confidentiality clause is necessary. In the case of Woolworths Ltd v Olson, Woolworths protected its confidential information with robust confidentiality clauses in their employee’s employment contracts. With the help of the legally drafted confidentiality clauses, Woolworths was able to protect its confidential information.
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A restricted activities clause seeks to protect you after an employee has ceased working for you. It prevents an employee from engaging in a range of conduct, such as setting up a business in competition with your business.
This clause will not be appropriate for all employees. You will need to carefully consider whether this clause is reasonably necessary for the protection of the business’ legitimate business interests. If a restricted activities clause does not protect legitimate business interests it may be deemed void.
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You may be employing an employee in an occupation whereby they are creating works or things that are new and innovative and you wish to retain ownership of these ideas. Alternatively, an employee may simply be in a position where in the course of performing their duties, they may come up with an idea that is related to their work. This idea may have some value which you would wish to retain within your business.
This clause also protects you in relation to rights created by the Copyright Act 1968 (Cth).
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A medical report can highlight whether an employee can perform the duties in a safe manner. It may also highlight any adjustments that you will need to make to accommodate an employee.
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Under the employment contract an employer pays for the medical certificate.
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This document has been prepared by the law practice Law Central Legal
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