AHRI:ASSIST – employee contracts


Does a contract of employment need to be in writing?

No. An employment contract need not be in writing. In fact, many employment contracts are informal and readily inferred from the fact that someone performs work for another party, and that other party pays the worker. However, it is beneficial to have the terms of an employment relationship written down clearly in a formal employment contract, in case there is any dispute over the terms in the future.

Can I stop an ex-employee working for my competitors?

Generally, it depends on the circumstances in which you wish to impose the post-employment restraint with regards to the reasonableness of such a restriction. Employers commonly seek to protect their business interests by including restraint of trade clause in their employment contracts; however, these may not always be enforceable.

When do I need to review employment contracts?

There is no legal requirement to review or vary an employment contract during its life provided that it does not undercut safety net conditions (as will be explained below, the fact that a provision in an employment contract provides for a condition in less beneficial terms than a safety net entitlement, is not itself illegal – but if only the contract provision is complied with, the employer will attract legal exposure). However, if a change is made to terms and conditions of employment, such as a remuneration increase, it is a good idea to confirm the change in writing to the employee. If the change is contentious or less beneficial for the employee, it is a good idea to ask the employee to signify their acceptance of the change by signing a copy of the letter and returning it to you.

How long is the probationary period?

Employment contracts will often contain provisions for a probationary period, being an initial period of service during which time both the employee and employer can decide whether they wish the employment to continue. From an employer’s perspective, it provides an opportunity to assess the employee’s suitability for the role for which they have been recruited.  From the perspective of the probationary employee, there is an appreciation that that their work performance will be under review and they do not have a guarantee of ongoing employment.

I want to terminate my employee. is my right to do this affected by the employment contract?

Yes. The employer needs to comply with any contractual restriction on the employer’s right to terminate. For example, is the right restricted to particular grounds or reasons? What notice period is required? Are there any other requirements under the contract for termination, eg provision for the manner in which notice is delivered or a restriction on the capacity to require the employee to serve some or all of the notice without performing duties? The employer needs also to satisfy any employment entitlements triggered upon termination. If the employer is terminating under a particular ground, eg serious misconduct, that ground must be established.

In to the contract of employment and to the NES requirements, modern awards will usually provide for notice of termination by an employee. It will also provide for an entitlement to paid leave for job search when an employee is serving notice.  Modern awards may supplement the NES redundancy provision by making provision for redundancy pay entitlements for an ‘industry specific redundancy scheme’.

To read past AHRI:ASSIST columns click here or visit the AHRI:ASSIST page

This article is an edited version. The full article was first published in the November 2015 issue of HRMonthly magazine as ‘AHRI:ASSIST’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here

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AHRI:ASSIST – employee contracts


Does a contract of employment need to be in writing?

No. An employment contract need not be in writing. In fact, many employment contracts are informal and readily inferred from the fact that someone performs work for another party, and that other party pays the worker. However, it is beneficial to have the terms of an employment relationship written down clearly in a formal employment contract, in case there is any dispute over the terms in the future.

Can I stop an ex-employee working for my competitors?

Generally, it depends on the circumstances in which you wish to impose the post-employment restraint with regards to the reasonableness of such a restriction. Employers commonly seek to protect their business interests by including restraint of trade clause in their employment contracts; however, these may not always be enforceable.

When do I need to review employment contracts?

There is no legal requirement to review or vary an employment contract during its life provided that it does not undercut safety net conditions (as will be explained below, the fact that a provision in an employment contract provides for a condition in less beneficial terms than a safety net entitlement, is not itself illegal – but if only the contract provision is complied with, the employer will attract legal exposure). However, if a change is made to terms and conditions of employment, such as a remuneration increase, it is a good idea to confirm the change in writing to the employee. If the change is contentious or less beneficial for the employee, it is a good idea to ask the employee to signify their acceptance of the change by signing a copy of the letter and returning it to you.

How long is the probationary period?

Employment contracts will often contain provisions for a probationary period, being an initial period of service during which time both the employee and employer can decide whether they wish the employment to continue. From an employer’s perspective, it provides an opportunity to assess the employee’s suitability for the role for which they have been recruited.  From the perspective of the probationary employee, there is an appreciation that that their work performance will be under review and they do not have a guarantee of ongoing employment.

I want to terminate my employee. is my right to do this affected by the employment contract?

Yes. The employer needs to comply with any contractual restriction on the employer’s right to terminate. For example, is the right restricted to particular grounds or reasons? What notice period is required? Are there any other requirements under the contract for termination, eg provision for the manner in which notice is delivered or a restriction on the capacity to require the employee to serve some or all of the notice without performing duties? The employer needs also to satisfy any employment entitlements triggered upon termination. If the employer is terminating under a particular ground, eg serious misconduct, that ground must be established.

In to the contract of employment and to the NES requirements, modern awards will usually provide for notice of termination by an employee. It will also provide for an entitlement to paid leave for job search when an employee is serving notice.  Modern awards may supplement the NES redundancy provision by making provision for redundancy pay entitlements for an ‘industry specific redundancy scheme’.

To read past AHRI:ASSIST columns click here or visit the AHRI:ASSIST page

This article is an edited version. The full article was first published in the November 2015 issue of HRMonthly magazine as ‘AHRI:ASSIST’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here

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