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5 things to consider for employment contracts

5 things to consider for employment contracts

In many small businesses, employment contracts can be an afterthought – after all, getting all your paperwork ducks in a row can be time consuming and overwhelming, and your days are probably already busy. Here are five items that are often overlooked in the work contract agreement, but are a good idea to include to ensure everyone’s interests are protected.

Of course, there is no substitute for qualified advice, especially when it comes to employment law. Be sure to seek out independent legal advice that’s specific to your own situation.

1. Confidentiality agreement

Whether you’re a cutting-edge research laboratory or simply a local bakery with a secret recipe, it’s important to ensure your trade secrets stay behind closed doors.

One of the key elements to consider for employment contracts is protecting sensitive information. As well as covering intellectual property, you may also want to prohibit discussion of internal business activities with non-employees, such as partnership negotiations. You also have the right to request ongoing confidentiality after the contract has ended.

You may also want to outline appropriate usage of information technology, such as flash drives, social media and cloud storage. Business Victoria provides a helpful template for you to use – especially if you want to allow employees to bring their own devices to work.

2. Over-award agreement

This refers to the amount you are paying to the contractor above the minimum wage. This could be part of their base wage or it could be in the form of non-wage compensation, such as overtime payments or shift penalties. Will you be paying it as part of the hourly or daily rate, or as a lump sum?

If your compensation structure includes such complexities, it’s a good idea to describe them clearly so there can be no misunderstandings later. Your trusted legal advisor is the best source of insight for your business’ individual requirements.

3. Description of role responsibilities

It’s often beneficial for terms and conditions of employment to include, in as much detail as possible, a description of the work that will be performed by the individual. If relevant, specific outcomes should also be described, along with when and where the work will be undertaken.

It’s also a good idea to outline any changes that would require a new contract to be negotiated. These might include a change in duties, remuneration or job location.

4. End-of-contract terms

In collaboration with your legal advisor, consider stating the conditions under which the contract can be ended, including when one party ends (or ‘terminates’) the contract early. These can include:

By performance: Where both parties have completed their duties as laid out in the contract.

By agreement: Where it is agreed by both parties to end the contract before work is complete.
Due to a breach: Where one party breaches any ‘essential’ employment contract terms (i.e. any terms considered fundamental to the contract agreement).

5. Dispute-settlement arrangements

It could be a good idea for the contract to outline a process for resolving disputes before they go to court, depending on your legal advisor’s professional opinion. This might start with informal discussion and negotiation, before moving on to other, more formal dispute-resolution procedures.

As an employer, including the above information can save you a lot of hassle further down the line. Keep track of up-to-date information about your hiring obligations at business.gov.au or ask an advisor you trust to give you insight into your individual needs.

Knowing your rights and obligations is crucial to staying ahead of any potential employment issues. Learn about the Small Business Fair Dismissal Code here.

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