4 Key Terms to Include in an Employment Agreement

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 an employment agreement protects the interests of your business by including five key terms.

1. 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.

2. General Standards: Hours, Leave, Termination

The Fair Work Commission has issued the National Employment Standards (NES), which underpin general conditions and standards. 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 you include these standards, as per the NES. Accordingly, your employees are aware of their rights and the standards they must meet to benefit your business.

3. Restraint of Trade/Non-Compete 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.

4. Confidentiality Clause

It is important to protect the information, ideas and property of your business. 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 your employees keep them private and confidential, it is advisable to include a confidentiality clause in an employment agreement.

Key Takeaways

Every employment agreement is different. Therefore, it is important that your employment agreements reflect the:

• interests of your business;
• type of business you have; and
• 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.