Every other important aspect of yout business is covered by a contract – lease of premises, supplier agreemetns, customer arrangements so why should staff be any different? Despite what many people think you really need a contract of employment for every employee. Yes, even your first employee. Many micro businesses don’t set employment contracts until they have severl employees – I know of one company that had 12 staff before they set contracts up -and this is very risky. As with any contract, an employment contract sets out key terms and conditions that inform and guide both the employee nad the employer. As has been said before, if it isn’t documented then it did not happen!

Employment contracts have an added level of complexity and importance as they sit witin both contract law and the provisions of the Fair Work Act. As a small business (defined as fewer than 15 employees by tthe Fair Work Act) you still must have employment contracts with your staff. The definition of an employee can be tricky to define as sometimes people think they have contractors until the Fair Work Ombudsman and/or the Australian Tax Office inform them otherwise. For the sake of this blog, let’s assume you want to employ a person to help you 2 days a week. Whether you define that as Casual or Part Time, you have an employee.

Here are five key things that you really need to know about employment contracts.

1. Contract law includes a contract of employment. This means that contents of that contract cannot be varied unless with the agreement of both parties. Most workplace policies need to be varied from time to time, especially as a busienss gwors and neding to rewrite and re-sign every employment contract to get the consent of employees to do this is very time consuming. Tip – do not include workplace policy in your employment contracts as this makes the process of revising or updating policies quite time consuming and potentially unachievable.

2. Employment contracts do not have to be re-signed each year, unless they are specifically for a fixed term of employment. When you issue a contract of employtment it applies in that form until it is terminated. Tip – decide early if you want a “defined term” or ongoing contract of employment with your staff.

3. Existing employees cannot be forced to sign a contract if they have been working for some time. You might be in a situation where you have staff without a written contract and want to address that. To do so needs a good communication approach and good relationships with staff. If those staff refuse to sign a new contract, the implied terms and conditions that they have been employed under will apply. In other words, what you have been doing in the past will continue to apply BUT you have no proof or evidence of any special agreements. Tip – Talk first with any staff who may not have a contract and explain why it is important for both of you to now have a written contract.

4. Terms and conditions of an employment contract MUST be at least the conditions in the National Employment Standards (found at this link https://www.fwc.gov.au/awards-and-agreements/minim… ) and the relevant award covering yoru industry. Some awards have a provision allowing variation of certain clauses only if both parties document and sign their consent. Tip – know the conditions that need to be met and make sure that your contracts are fair.

5. Get good advice. Employment contracts are important foundations of your business and you need to get good advice on what to have in as well as what to leave out. Tip – use a good employment lawyer (make sure their expertise is in employment law) or join an employer association or locate a good HR consultant who has access to the latest information before you start hiring people.

Hiring staff can be an exhilarating and exciting time as it means your business is growing, yet it is also one of the transition stages of your business that can truly be make or break. Hopefully these tips will help you make it.

Pam Macdonald