Individual Employment Contracts make good sense for both employers and employees. They set out precisely the terms and conditions of employment so that everyone is clear what is expected of them. This is really important in today’s workplace. Although employment conditions are largely regulated by national employment laws, these laws do not cover every aspect of the employment relationship.

This Bulletin looks at the gaps in the national employment laws that leave both the employer and employee exposed.

What can you do if your employee slams your company or fellow employees on Facebook or Twitter?

Hands up those who have heard of an employee posting derogatory comments about their company or colleagues on Facebook or Twitter.

The employee may claim they did nothing wrong as it was done outside of work time and that the Facebook page had maximum privacy restrictions or the Twitter account had a restricted audience so it could not be accessed by the public.

Comments made about a company clearly have the potential to damage the company’s reputation. Comments made about fellow employees could also damage their reputation or amount to sexual or racial harassment or discrimination.

While there is a recent history of employees having their employment terminated for serious misconduct as a result of posts they have put up on Facebook, a number of these have been appealed to Fair Work Australia on the grounds of unfair dismissal. The results of these appeals have varied and there does not appear to be a clear view about what actions an employer can safely take in these situations. Our Platinum Members can read about three recent cases.

An individual Employment Contract provides more certainty about what is, or is not acceptable in relation to comments made about the company or fellow employees in public or on social networking sites. This could be done in a number of ways:

• If your company has developed a social networking policy, a code of ethics or a code of conduct, the Employment Contract could contain a condition that the particular policy (or policies) must be adhered to;
• The contract could contain a general condition that the employee must “refrain from acting or giving the appearance of acting contrary to the Employer’s best interests”; or
• You could insert a specific reference about the employee refraining from commenting on any social networking site about employment related matters which potentially harm the interests of the company or another employee.

By placing a condition in the contract of employment, the employee must agree to abide by it as part of their employment. An employee would not be able to claim he or she was unaware how such conduct would be viewed by the company and therefore provides certainty for all parties.

If an employer decides to insert a specific condition about the use of social networking, the employer must be mindful that they cannot restrict a person’s freedom to have a social networking account or make comments on it.

Can a company protect against confidential company information being disclosed by an employee?

National employment laws do not protect against disclosure of confidential company information. While there are protections against disclosure of confidential information in legislation such as the Corporations Act 2001 (Commonwealth) or in equity, it is far simpler and provides more certainty to have a confidentiality clause in an Employment Contract. All parties will be aware of their obligations to maintain confidentiality at the time of signing the Employment Contract.

Can the company’s intellectual property be protected?

When an employee leaves, there is always a risk of them going to a competitor and using the knowledge they obtained from your company. The risk is compounded when they are in a position of developing innovative products for your company.

One of the best ways to protect your company’s intellectual property from such risk is to have an express clause in an Employment Contract which defines the employee’s scope of employment as including a duty to invent or develop products.

By defining the invention and development of products within an employee’s duties, the law can protect the employer’s interests. The consequences of not doing so are highlighted by the case of Spencer Industries Pty Limited v Collins where 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. More tips for Platinum Members follow.

As you can see, there are many important factors which employment laws do not cover and which have the potential to harm your company and your employees. It is strongly advisable for all workplaces to have individual Employment Contracts. Employment Contracts minimise the potential for harm, protect the company and provide clarity to everyone about their respective rights and obligations.

Preparing an Employment Contract can be complex and time consuming. Law Central has made it easy for employers by offering an Employment Contract that can be tailored to meet the individual needs of an employer.

The Employment Contract offered by Law Central incorporates the latest legislative changes including the Fair Work Act 2009 and National Employment Standards.

• Employment Contract

• Issue 410: Don't Get Caught Out
• Issue 409: Who do you trust? Choose your Enduring Power of Attorney while you still can
• Issue 408: Will you add it to your EoFY checklist?
• Issue 407: Leasing Business Real Property from SMSF