An employment agreement is a legal agreement between employers and their employees. The agreement dictates the terms and conditions of the employer’s relationship with their employees. When drafting an employment agreement, you must cover your rights and obligations as an employer and those of the employee. It is important to ensure that an employment agreement protects the interests of your business by including the following key terms.

Pay Terms

It may seem obvious but it is important to set out the pay in an employment agreement. There are national minimum wages that you must adhere to in an employment agreement. However if your business falls under an industry that has a Fair Work award, the terms regarding pay in an employment agreement must be by the terms of the award.

General Standards – Hours, Leave, Termination

General conditions and standards are underpinned by the National Employment Standards (NES) issued by the Fair Work Commission. When drafting an employment agreement, you must include the hours you require employees to work, the leave that they are entitled to and the reasons and conditions surrounding termination and redundancy. It is important that these standards, as per the NES are included in an employment agreement so your employees are aware of their rights and the standards they are required to meet to benefit your business.

Restraint of Trade / Non-Competition Clause

When recruiting employees, it is essential to ensure that they do not perform work or share trade secrets, intellectual property and information of your business with your competitors. It is also in your best interests to ensure that employees do not leave to start a rival business and potentially poach your customers or clients.

A restraint of trade clause or non-competition clause prevents your employees from becoming a competitor or joining a competitor during their employment and even after the duration of their employment with you.

Confidentiality Clause

It is important that the information, ideas and property of your business is protected. When working for you, your employees may come across a number of assets possessed by your business. In order to protect such assets and ensure that they are kept private and confidential by your employees, it is advisable to include a confidentiality clause in an employment agreement.

Dispute Resolution Clause

Things don’t always go as planned, and so it is wise to include a dispute resolution clause in an employee agreement to ensure that disputes are dealt with both efficiently and effectively. It is crucial to consider how things may proceed in the event of a dispute so you are well equipped in dealing with it. Furthermore, including a dispute resolution clause in your employment agreement with your employees limits the likelihood of taking the matter to court and enduring a possibly expensive and lengthy trial.

Disputes can get messy, and as an employer, it may be vital to maintain relationships and uphold a positive image for your business. Having a dispute resolution clause can dictate that the preferred resolution methods are either negotiation, mediation or arbitration, alternatives to court. Using alternative methods serves to better ensure that the relationship between yourself and your employee is maintained. Furthermore, because alternative methods of resolution are generally conducted privately, the reputation of your business is not necessarily tainted by the dispute.

Key Takeaways for an Employment Agreement

Every employment agreement is different and it is important that your employment agreements reflect the interests of your business, the type of business you have and the employees you recruit. To ensure your interests are best communicated and protected through an employment agreement, it is advisable to include terms regarding pay, general standards, restraint of trade, confidentiality and resolving disputes. If you need further information and help to draft employment agreements to cater to the interests of your business, contact one of our business lawyers.

Emma Heuston

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