Does My New Employee Need an Agreement?

Welcoming employees into your business is an exciting time, and you will need to consider the following to ensure that your new starter can hit the ground running: 

• working arrangements, 
• salary, 
• superannuation, and 
• training. 

But what if you haven’t yet drafted an employment agreement? We step you through what an agreement should include and potential consequences if you don’t provide an employment contract.

What Should an Employment Agreement Include?

An employment agreement is an agreement between you, the employer, and your employees. It sets out the nature of the employment (full-time, part-time, casual) and also the specific terms and conditions of the employment. Employers should understand their obligations before employing any new team members.

National Employment Standards

Under Australian law, regardless of whether there is an employment agreement in place, a set of minimum entitlements applies automatically to every worker. These are known as the National Employment Standards or NES and include:

• maximum weekly hours;
• requests for flexible working arrangements;
• annual leave;
• parental leave and related entitlements;
• personal carer’s leave and compassionate leave;
• community service leave;
• long service leave;
• public holidays;
• notice of termination and redundancy pay; and
• fair work information statement. 

Employers can’t enter into an employment agreement with an employee that offers anything below the NES. It’s also important to know whether an industry award will cover your employees. This will outline the minimum pay for your employees as well as some of the conditions of their employment. If no award applies and you do not have an enterprise agreement, your employee will follow the agreement you both agreed on.

Do I Need to Give My Employee an Agreement in Writing?

Although you don’t need to provide an employee with a written agreement, employers may struggle if a dispute arises in the future and there is no record about the terms of employment. If you can’t have a formal agreement in place on day one, it’s a good idea to at least make a note of the basic agreed upon terms for record-keeping purposes. Maintaining a record of the employee’s start date, salary and entitlements and work days and time will help reduce the risk of a dispute arising in the future.

What Happens if I Don’t Give Them an Agreement?

If you don’t give your employee an employment contract, the NES will still apply as well as any applicable award and the national and state employment legislation. The Fair Work Act 2009 (Cth) and Fair Work Regulations 2009 (Cth) make up Australia’s national employment law framework. 

Even if you don’t provide an employee with a written agreement, the law still requires employers to provide every new employee with a copy of the Fair Work Information Statement. This Statement provides your employees with the required information regarding their rights under the NES.

Key Takeaways

An employment agreement typically sets out clauses addressing: 

• restraint of trade and confidentiality;
• commission structures;
• dispute resolution processes; and
• annual salary.

The contract enables you as an employer to clearly outline your expectations to the employee. Remember that regardless of whether you have a written agreement or not, the NES will still apply along with any relevant award. Your agreement cannot provide your employee standards that fall below those set out in the NES.

If you have any questions or need assistance drafting your employment contract, get in touch with our employment lawyers on 1300 544 755.