The Importance of Employment Contracts

By Ioanna Moliviatis Intern at Interpret Legal and Flinders University law student

Employment law and contracts are important in this ever-changing and complex area of law. Getting it right is crucial to not only protect employers but employees alike. Employment contracts are agreements between an employer and an employee to establish vital terms and conditions of employment, whilst still upholding the minimum standards set out within the National employment standards[1] and any applicable awards.[2] These contracts can come in different forms whether that be for casual, permanent workers or for an independent contractor. Employment contracts are imperative to have especially when not having one can mean a lack of protection for both parties involved, and an absence of a legally defined relationship between employer and employee. Which can leave you open to uncertainty and potentially litigation regarding various things such as obligations and benefits.

It is important for businesses to safeguard themselves through sound employment contracts for many reasons. In areas where confidentiality is key, having employees agree upon employment contracts that incorporate confidentiality clauses ensures awareness of any obligations relating to workplace confidentiality.[3] Thus, ensuring your interests as a company are protected and in turn forms the basis of legal action if required. Employment contracts are also the most effective way to establish working standards of employees.[4] By having this clearly set out within your contracts you can determine, regulate and enforce behaviours that your employees must observe.[5] When employers run into issues in their workforce this allows scope to justifiably enforce training or terminate employment when expectations are not being met.[6] Importantly contracts define and regulate benefits such as procedural correctness in instances of maternity leave, sick leave, annual leave and establishing working hours which in turn help establish the form of employment.

This has become significantly important especially when considering the most recent Federal Court judgement of WorkPac v Rossato[7] which has also led to amendments[8] within the Fair Work Act.[9]  Rossato in this case sought to attain benefits such as annual leave under the claim that he was a permanent employee over the course of employment with WorkPac. Based on previous considerations in Workpac Pty Ltd v Skene[10] which determined the meaning of casual employee and the concept of ‘firm advanced commitment’[11] the court held that Rossato was in fact a permanent employee. This decision was based on the duration and regularity of his employment with the company. Furthermore, the failure of adequately establishing the nature of his employment within any relevant contracts.[12]

Although this case brings clarity around the issue of casual work it also highlights the importance in having a contract that clearly outlines and reflects the employment relationship and obligations between the employee and the employer.[13] Along with the importance of reviewing existing contracts. It is imperative that employees are correctly allocated to the correct job type. This could be achieved by employers taking into consideration what job type would be most appropriate for the employee by assessing the length of time working for the company such as long-term casuals or the regularity of shifts.[14]

Here at Interpret legal we offer casual conversion letters and employment agreement templates for all employment types. which we can customise to your company’s needs.

[1] Fair Work Ombudsman, ‘Employment contracts’ (web page) <https://www.fairwork.gov.au/awards-and-agreements/employment-contracts>.

[2] Fair Work Ombudsman, ‘Employment contracts’ (web page) <https://www.fairwork.gov.au/awards-and-agreements/employment-contracts>.

[3] Linkilaw, ‘Why you Need an employment contract’ (Web page, 2016) <https://linkilaw.com/company-law/why-need-employment-contract/>.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] WorkPac Pty Ltd v Rossato [2020] FCAFC 84.

[8] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021.

[9] Fair Work Act 2009 (Cth)

[10] WorkPac Pty Ltd v Skene [2018] FCAFC 131.

[11] WorkPac Pty Ltd v Rossato [2020] FCAFC 84.

[12] Georgie Chapman, ‘WorkPac v Rossato – Implications for casual employment’ (Web page, 2020) <https://hrlegal.com.au/workpac-v-rossato-implications-for-casual-employment/>.

[13] Ibid.

[14] Ibid.

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