the complexity of an employment contract

Every employee working in Australia has an employment contract with their employer, whether it is written, verbal or a combination of the two. A written contract prevents disputes about the terms of the contract.

The common law contract of employment is the foundation of the terms and conditions of employment relationships in Australia. Employment contracts are no different from other types of contracts in most respects. They require offer, acceptance, consideration, and intention to create legal relations. 

Employment contracts undergo considerable scrutiny because the employer is generally held to be more powerful than the employee. However the contract is formed, it must meet the minimum employment conditions set out in the National Employment Standards (NES) under the Fair Work Act (2009). These ten requirements are set out in Chapter 5 ‘the Fair Work Act (2009)’ and address working hours, paid and unpaid leave, notice periods and public holidays. 

As with any contract, there may be expressed terms (usually written down) and implied terms that may arise through other laws – for example, industrial awards, collective or enterprise agreements, or through customs and practices in the workplace. Even the expressed terms of a contract may not be in the contract itself – they might be contained within company policies or handbooks, such as a health and safety handbook or a disciplinary policy. To the greatest extent possible, it is important to identify and set out, in writing, the terms of employment so that each party understands their rights and obligations. 

The terms of employment may be formulated in a legal document or simply recorded in a letter of offer. It is important that any terms not contained within the contract are accessible to employees.

An employment contract will state the nature of employment (full-time, part-time etc.), the hours per week, remuneration, the duties, and responsibilities of the position, leave entitlements, termination and notice requirements, and any additional information relating to company policies and post-employment protection (anti-competition, etc.). Depending on the industry or occupation, a modern award may apply which will set out employment conditions (see chapter 5 ‘modern awards’).

Both the employer and employee must fulfill certain obligations within their roles and towards each other. Some of these obligations are set out under employment legislation and within the employment contract. Other obligations, such as acting openly and honestly with each other, are implied and considered good working practice.  

There are different types of employment, ranging from permanent and temporary full-time and part-time work to casual work and independent contractors. Each type of employment has its own benefits and drawbacks, and employers need to ensure that the employment contract fits their particular business needs (see chapter 5 ‘different forms of employment’).

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