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Why have a Written Employment Contract?

In any employment relationship a legal contract will exist. The express terms of that contract may be written, oral or a combination of the two.

At Mal Ryan & Glen we can help you with employment contracts, advice and workplace disputes.

You can contact the Fair Work Ombudsman for free advice about hiring new employees.

Contact the Fair Work Ombudsman via:

Best Practice Approach to Employment Contracts

Even before drafting contracts, employers should understand their rights and responsibilities in hiring staff.

This includes:

  • pay rates;

  • minimum terms and conditions of employment;

  • tax;

  • superannuation;

  • occupational health and safety.

Once employers are clear on what they need to do, they should set up an employment contract that is tailored to their business.

It is always best practice to engage employees under a written employment contract. This ensures that each party to the agreement has clarity about the express terms of their employment and prevents misunderstanding between the parties.

Informal Employment Contracts

However, it is not a legal requirement to have a written contract of employment. Such arrangements are often referred to as informal contracts.

If you do commence an informal contract the terms and conditions of that contract may be quite difficult to establish. This can lead to misunderstandings and disputes between the parties to the contract.

Common legal issues with informal employment agreements include:

  • whether a worker is an employee at all or rather a contractor, partner or a volunteer;

  • what terms and conditions of employment apply;

  • the type of employment: full-time, part-time or casual;

  • when the contract commenced.

The issue of when the contract commenced calls into question what entitlements have accrued and how much those entitlements are worth. Underpayment claims and possible breaches of the Fair Work Legislation may come into play.

Where an informal contract exists, the terms of the contract may need to be ascertained by examining the parties behaviour to establish a common intention. The courts may examine letters, emails, phone calls, text messages and any other relevant material to identify the terms the parties reasonably appear to have agreed.

Importantly, the subject beliefs of the parties in dispute will not be relevant if the courts are called to judge such a dispute. Rather, the courts will decide what a reasonable person would have thought about the nature or the terms of the contract having regard to the circumstances of the case.

Disputes about the terms of an informal employment contract are required to be interpreted by a court, rather than the more informal and inexpensive Fair Work Commission. Therefore, it is prudent for the sake of harmony and to prevent future legal expenses to get it right from the start.

At Mal Ryan & Glen, we take a commercial approach to assisting you with your business operations. Contact us by making an enquiry or by email or phone.

This article is general in nature. It does not constitute legal advice and should not be taken as such.


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