While most people may think of employment contracts as a form of protection for the employee, they also equally protect the employer. An employment contract outlines the rights and responsibilities of both employers and employees involved in the employment relationship. What should employers include to protect against potential litigation?
Put it in writing
Although contracts can be in either written or verbal form, verbal agreements may be difficult to prove should things go wrong. You should always have written contracts in place so that disputes can be settled under the terms, conditions and clauses specified in the contract. Generally speaking, it’s the employer who creates the employment contract before the employee commences employment.
Include essential information
Although employment contracts differ across organisations and roles, they should contain the following important information at a minimum:
- Date of commencement and duration of employment (the contract may need to be renewed at the end of the period).
- Hours of work, duties and responsibilities of the employee.
- Remuneration, perks, bonuses.
- Maternity and paternity leave, annual leave.
- Company policies regarding dismissal, suspension and indiscipline.
- Termination notice period and post-employment restraints.
- Job redundancy, intellectual property rights and probation period.
- Disclosure of confidential information.
Employment agreements may contain many more provisions, but these are some of the essential inclusions.
Include your responsibilities
Employers have specific responsibilities towards their employees which include providing a safe and healthy working environment, paying fair and equitable remuneration for all job roles, informing employees about their rights and duties and prioritising employee wellbeing at all times.
They must also train and mentor employees, invest in proper PPE and safety equipment and keep themselves adequately insured in case of accidents or mishaps in the workplace.
However, despite the best efforts, workplace disputes can and do occur, and it’s best to keep yourself informed of your rights as an employer.
Avoid litigation
According to the Fair Work Ombudsman, Australian employers have the right to dismiss employees for breach of contract, lack of performance or other disciplinary issues. Having a well-structured employee contract can protect you against potential damages and stop the employee from violating the terms of the agreement.
As an employer, you are entitled to create and implement workplace policies, and you also have the right to be notified of resignation or impending leave notice. Employers can also include specific confidentiality and non-disclosure clauses in the contract.
In the absence of a proper employment agreement, employers should still consider seeking legal counsel as they may have other grounds for claims. These could include theft of trade secrets, intentional breach of contract, breach of confidentiality, or defamation issues among others.
It’s best to get legal advice when drafting employment contracts. If structured incorrectly, the agreement may not be enforceable in a court of law and you may be vulnerable to litigation.
Rolf Howard, Managing Partner, Owen Hodge Lawyers
