What to include in an employment contract
3 minute read
3 minute read
Found the perfect employment match? Then it's time make it official. An employment contract helps you set out the terms, conditions, rights and obligations of your employment relationship with your staff members and ensures everyone knows where they stand. Here are seven key elements of an employment contract.
It's important to specify whether you're offering a full-time, part-time, casual or volunteer position. This part should also include the number of hours your new hire will be required to work each week or fortnight and the breaks they'll be entitled to.
Here, state the annual salary or hourly or weekly wage you're offering and whether the role is subject to the terms and conditions of any modern awards, such as meal or travel allowances, vehicles, overtime or penalty rates.
Clearly state the date employment starts and how much notice both parties must give before terminating the employment. This acts as assurance, should either of you decide to move on unexpectedly.
A probation period allows you time to determine whether someone is a good fit for the role and your business. It can range from a few weeks to a few months. It's up to you to determine how long it will take to assess their suitability for the role.
Some employers use a different probation period job title for the length of time specified in employment contracts.
This section outlines the tasks or duties your new hire is expected to perform. This ensures that both the employer and their employees are absolutely clear about the role that's being signed up for.
All permanent employees must receive minimum legal entitlements of annual leave and personal leave as identified in the Government's Fair Work Information Statement, which forms part of their National Employment Standards. Your contract should state any rules around when the former can be taken and whether you offer any other types of paid leave. This could include maternity, community service and long service leave.
Remember that there may be different rules depending on the type of employment, including independent contractors and casual employees. Your standard employment contract may have to be adapted according to employment status.
To sum up
Hiring your first employee is a milestone for every small business, and it's important to get it right. A detailed employment contract could help prevent potential misunderstandings and set you up for a fruitful working relationship. If you're not sure on the specifics of what needs to be included in a contract, you can always check with an employment lawyer.
This information does not take into account your personal circumstances and is general. It is an overview only and should not be considered a comprehensive statement on any matter or relied upon. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this article, including when considering tax and finance options for your business. Westpac does not endorse any of the external providers referred to in this article.