Put It In Writing

Employment contracts get a bad rap. They're expensive to get drafted up properly and then often riddled with legal jargon.

Employers view them as costly paperwork. Employees believe they whittle away their rights.

Many employers don't bother with contracts. Staff are engaged on a handshake or verbal agreement. Legally speaking, a verbal agreement can still constitute a contract, but it obviously makes it very hard to prove any terms or conditions agreed upon!

So why have a written employment contract?

Well, here's a few reasons...

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5 Reasons To Have An Employment Contract

#1

To spell out the expectations of both parties (the employer and the employee) to the employment agreement.

This means that the role, duties and terms of engagement are clear enough so that everyone understands what is expected of them.

There can still be wriggle room. A degree of flexibility can be included in the contract, whether that with rostered hours or tasks and duties. However, the basic terms of employment should be made clear in the basic employment contract.

#2

You can protect your business by including a confidentiality clause.

Confidentiality can be in relation to the way your business operates, the data exclusively owned and/or utilised by the organisation, as well as client lists and 'trade secrets'.

Non-compete or restraint-of-trade clauses, although problematic in their own rights, are also an option for a written contract. 

#3

Managing performance issues.

If there's nothing in writing, then the employer will have a difficult time disciplining an employee for not carrying out their duties when there's no agreement stating what those duties are.

The law doesn't look too kindly on employers firing employees without having made an attempt to correct the employee's errors, or without giving the employee a chance to improve their performance.

Best practice is to not only address what is expected of the employee, in terms of their performance, but to also specify in the employment contract what the procedure is for managing performance issues. 

#4

It's not me, it's you: termination of the employment relationship.

Terminating employment, from either side, can often be awkward. However, having a clear outline of what the process is will benefit both parties and help avoid some of the awkwardness (hopefully).

Specifiy the notice period for terminating employment or resigning (which are effectively the same thing), and what will happen if that is not adhered to. You may want to lengthen the notice period for employees that are difficult to replace.

A well-drafted dispute resolution clause can be a life saver. Or, at least, a money saver. Don't just rely on a cookie-cutter one and make sure it is practical for your particular workplace. Stating the steps to take when a grievance arises (with owners, managers or other staff members) ensures that issues can be dealt with swiftly through the correct chain of command. 

#5

Non-Compliance.

The Fair Work Commission has fined employers for undermining employment conditions, with or without written employment agreements in place.

Having a well-drafted* employment contract in place, however, reduces the risk of falling foul of the law. It means that employers and employees know what is expected of them, in tems of their responsibilities, and that if there are any problems or issues there is a pathway to having them addressed (performance management, dispute resolution, termination, etc).

 

(*By 'well-drafted', I do mean one that has been prepared by a solicitor, and not one like this.)

So, what are your employment contracts like?

Need to get them in order?

You might also want to look at your workplace's policies, to make sure they reflect company expectations.

While you're here, you might be interested in this article on performance reviews.

employment contracts performance management

The above article is general advice only. Spindle Consulting is not a legal firm, but does highly recommend having a lawyer with specific knowledge of employment law and industrial relations review all your employment contracts.