As a beauty therapist, you work hard to ensure your clients look and feel their best. However, while you must focus on your clients, you must also focus on protecting your business by having a comprehensive employment contract for each employee. You should ensure your employment contracts are well drafted to protect you and minimise any ambiguity that may cause employment disputes. This article will outline key areas that your employment contracts should address.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Types of Employment Contracts
You must ensure that your employment contracts:
- correctly identify the type of employee your business engages; and
- provide the appropriate employee entitlements accordingly.
Although there are two main types of employment, you must carefully consider which type of employee will suit your business.
Casual Employment Contracts
Casual employment is a flexible arrangement where you do not guarantee your employee is ongoing work with the business. When you notify casual employees about a shift, they can accept or refuse it.
Additionally, you do not owe casual employees entitlements such as paid personal or annual leave, like permanent employees. Instead, casual employees are entitled to a 25% loading on top of their hourly base rate.
Permanent Employment Contracts
Permanent employment involves set work hours each week and an ongoing relationship. A permanent employee can either be a full-time or a part-time employee. A full-time employee usually works 38 hours per week, and part-time employees work less than 38 hours weekly.
It is important to remember that permanent employees are entitled to paid annual or personal leave and an extended notice of termination. If you require employees to be available for set shifts, and you can guarantee consistent shifts each week, you may employ a permanent employee.
No matter what you decide, you must ensure that your employment contract clarifies what type of employee you are hiring and provides for their relevant entitlements.
Pay Rate
To avoid any disputes in the future, you should ensure that your employment contracts include how much you will pay your employee. You must also ensure that you avoid underpaying your employee.
All employees are entitled to the national minimum wage but may also be covered by a modern award or enterprise agreement. If your employee is covered under an award or enterprise agreement, this will set out their minimum entitlements, such as their minimum pay rates. For example, as a beauty therapist, your employees will be covered under the Hair and Beauty Industry Award 2020.
Continue reading this article below the formProbation and Notice of Termination
Consider a probation period in the employment contract for permanent employees. A probation period is a fixed period in which you may terminate the employee’s employment with reduced notice. Employees are entitled to a minimum notice period of one week, even if they are dismissed during their probation period (unless serious misconduct exists). A probation period allows you to assess an employee’s performance and consider whether you want to continue to employ them.
You should also consider how much notice you will require the employee and your business to provide if either party wants to end the employment relationship outside the probation period. It is essential to include this to avoid any possible dispute and allow enough time for a suitable handover.
The law entitles employees to minimum notice periods, which increase incrementally based on their period of continuous service. You can either include the minimum notice periods or a set notice period. If you insert a notice period, you must ensure it does not undercut the notice period that the law stipulates.
Confidentiality and Intellectual Property
As a beauty therapist, you must protect information such as your client lists or beauty designs or processes. Therefore, you must ensure that your employment contract includes robust protections surrounding your business’s confidential information and intellectual property.
This generally involves drafted clauses that clarify that employees must comply with their confidentiality obligations. For example, the employee cannot disclose client lists or information. Additionally, the employee should assign any ownership of the relevant intellectual property to your business.
Restraint Clauses
Restraint clauses help protect the success of your business by restraining your employee’s conduct once they leave your business. There are two different types of restraint clauses, including:
- non-compete clauses, which prevent your employees from working with competitive businesses during and following their employment with you; and
- non-solicitation clauses, which prevent your employees from soliciting your clients, employees or suppliers following their employment with you.
While restraint clauses can effectively deter your employees from engaging in such behaviours, their enforceability will depend on numerous factors. A restraint clause will only be enforceable where it is reasonably necessary to protect legitimate business interests.
Training Costs
Suppose you provide or intend to provide training courses to your employees to further their skill base. In that case, you may wish to deter your employees from terminating their employment within a specific period (e.g. one year) after commencing re-training.
You can do this by including a clause in their employment agreement which provides that the employee will be liable for the training costs your beauty salon pays if they leave within the specified period.
However, it is essential to note that there are only limited circumstances where you can lawfully deduct money from an employee’s wages. Therefore, you should obtain legal advice if you consider including this clause in your employment contract.
Key Takeaways
As an employer operating a beauty salon, you need well-drafted employment contracts to avoid ambiguity and disputes arising in employer-employee relationships. To best ensure this, you should seek assistance from a business or employment lawyer when drafting your employment contracts.
If you need help drafting employment contracts for your beauty business, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Before you draft your employment contracts, you should carefully consider whether you know all your legal obligations as an employer. Employment laws often change, and with legal advice, you can prepare an employment contract that provides the legal protection your business needs, such as protection for your confidential information and intellectual property.
Every employee is entitled to the national minimum wage. However, an award or an enterprise agreement might cover your employees. If so, these documents will outline the minimum entitlements for your employees, such as minimum pay rates. Hence, you must carefully consider whether your employees are covered by a modern award or an enterprise agreement to ensure you are not underpaying your employees.
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