Employment Contracts Essential?

Many organisations are still signing up new employees using the same pre-Fair Work Employment Contract they have always used. At the same time most employees who joined the company before July 2009 are still on the same contracts they signed at that time. This means that almost certainly these agreements will not comply with the legal requirements stipulated by the Fair Work Act. This post therefore discusses some of the important issues the Small to Medium Enterprise should be aware of? If in doubt, you should have yours agreements reviewed. Note this discussion relates to national employers only (most of you).



Employment Contracts and the National Employment Standard (NES)

The NES came into effect on the 1st July 2009 and specifies the minimum employment conditions for an employee. If you are not familiar with the NES refer to the post below dated 22 Sept 09 which provides a comprehensive summary of the minimum employment stipulated under the ACT.
Should there is a conflict between your Employment Agreement and the NES; the conditions stipulated under the NES will prevail. As an example, many existing agreements stipulate that the employee is to work 40 hours a week and is entitled to 5 days non-cumulative sick leave. You may be under the impression that as these are stipulated in the contract that these ARE the terms agreed to. WRONG. Under the legislation, the employee is required to work no more than 38 hours per week plus “reasonable” additional hours as the job may require from time to time. This means that on average an employee’s work hours should average 38 hours. Whatever is stipulated in the employment agreement is immaterial, the NES prevails. The same is true of sick leave which is now referred to as Personal Carer’s Leave where the NES stipulates 10 days cumulative paid leave per year. So, at the very least, it is imperative that you align your agreements with the requirements of the Fair Work Act.



What happens if I don’t have a written Employment Agreement?

Some employers believe that by not having a signed agreement that they are safer from a workplace relations perspective. NOT TRUE. Once an employer agrees to pay an employee for services rendered, whether or not there is a written agreement, an Employment Contract has been deemed to exist. The employment conditions will be determined by the Fair Work ACT as will any implied and express terms. Naturally this form of agreement is a formula for a disaster. So whatever you, make sure you have your employees sign an agreement.



What the difference between and Employ Agreement and an Enterprise Agreement

An Employee Contract is an agreement between and individual employee and an employer outlining the terms and conditions that have been agreed between the parties. An Enterprise Agreement is a mechanism where a collective of employees and the employer negotiate common terms and conditions of employment. These negotiations may be initiated directly by the employees themselves or via a union representative of the employees. The Enterprise Agreement requires ratification via Fair Work Australia whereas the Employment Agreements does not. Once the Enterprise agreement has been ratified it becomes a Statutory Agreement meaning that the employer and employee become subject to statutory penalties if either party were to breach the agreement. Enterprise Agreements are complex instruments. If you are considering introducing an Enterprise Agreement into your workplace we strongly recommend that you seek external support.



Terms that should be included in any employment agreement

  1. Employee full legal name and address
  2. Title of the job to be performed and Job specification
  3. Commencement date
  4. Type of employment, i.e. full-time, casual, fixed term
  5. Remuneration and how this is made up.
  6. Termination conditions; notice periods required to be given to end the employment relationship
  7. Provision clarifying the status of the company policies and procedures. Note that care should be exercised when referencing the company’s policies as they may form part of that contract holding the employer liable to the terms therein.
  8. Provision where over-award payments are offset against non-wage entitlements, i.e. penalties, overtime. This ensures that the relevant modern award is taken into account.
  9. Ensure that there is acknowledgement that employee is legally entitled to work in Australia, and
  10. A provision which reflects how changes to the employee’s role or function is to be handlhttp://www.blogger.com/goog_1378430121"}">ed.