what’s in an employment contract?

Although the employment relationship is essentially an informal and ongoing process that happens whenever an employer has dealings with an employee and vice versa, initially this relationship is founded on a legal contract. The complexity of the employment relationship is reflected in the complexity of what forms the employment contract – it is important to be aware that not everything is written down, and even the elements that are, might not always be in the same place.

A contract of employment includes expressed and implied terms. Expressed terms are consciously agreed between the parties, while implied terms are not expressly agreed, but read into the contract nonetheless as ‘unwritten’ terms.

expressed terms

In any contract, there are terms that are in writing or are clearly agreed between the two parties to the contract – in this case, the employer and the employee. In the case of employment contracts, these terms may appear in other company documentation.

There is no statutory regulation in Australia as to what must appear in an employment contract; however, the terms set out in written employment contracts typically include:

  • the nature of employment (e.g. permanent or fixed term, full time, part-time or casual)
  • hours of work
  • the duties of the position and reporting structure
  • any reference to company policies and procedures
  • remuneration
  • leave entitlements
  • termination of employment requirements
  • post-employment protection regarding the employer’s intellectual property
  • confidential information and restrictions on employee conduct.

implied terms

There are often unwritten provisions that can be implied as being part of the contract of employment. These may arise:

  • through the employee’s and/or the employer’s conduct
  • through custom and practice
  • when a particular employer normally has a specific provision in place
  • through common law duties – e.g. to comply with equal pay legislation
  • if they are necessary to make the contract workable – e.g. a driver will be required to hold a valid driver’s license.

The fact that Australian law allows a verbal employment contract plus the combination of expressed and implied terms means it is not always easy to be clear what the terms of the contract of employment are – certainly the written terms are just part of the overall contract. Provided the contract meets the National Employment Standards (NES), the employer can decide to vary the terms of contract either through consultation and agreement, or by giving notice.

variation of the terms of an employment contract

Once an employee is informed of a variation, they are assumed to have accepted the changes if they continue to work as usual without expressing their objection.

It is possible for an employer to change the terms of contract without consultation or notice – a unilateral variation of contract. This practice is not recommended, is considered unusual, and is only acceptable when less significant variations are to be made. An example of this is when the Code of Conduct or Confidentiality Statement that is referred to in the contract is slightly amended. Major unilateral variations (e.g. to pay, working hours, location or reporting structure) are unlawful and will result in penalties. In addition, unilateral variations that leave the employee with no choice but to resign are grounds for unfair dismissal.

other sources of contractual terms

In addition to the NES, further conditions can come from a variety of sources including a modern award and enterprise agreement-based transitional instruments (see chapter 5 ‘modern awards and enterprise agreements’), National Minimum Wage orders, transitional minimum wage instruments, and state or federal laws. 

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