Avoid These Common Mistakes in Employment Contracts

We take a look at the top mistakes that Australian employers make in their employment contracts and how to avoid them.

Employment contracts are an essential part of any business relationship between employers and employees.  However, employers in Australia often make mistakes when drafting employment contracts, which can lead to legal issues in the future.

By following these tips, we help employers avoid common mistakes and ensure that their employment contracts are legally sound, compliant with the law, and protect their business interests.

Failing to Include a Probationary Period

A probationary period is an important aspect of any employment contract. It allows employers to assess the employee’s performance and suitability for the job, without being bound to the employee permanently. Failing to include a probationary period in the employment contract can leave the employer with limited options if the employee is not performing well. By including a probationary period, employers can terminate the employment relationship without having to provide a reason, provided it is not for discriminatory reasons.

Ignoring Minimum Employment Standards

Employers must comply with the minimum employment standards set out by Australian law and the National Employment Standards (NES). These standards include entitlements such as minimum wages, maximum hours of work, and leave entitlements. Employers who fail to include these minimum standards in their employment contracts may find themselves in violation of the law, resulting in potential legal action and penalties.

Failing to Include Termination Clauses

Employment contracts should include provisions for how the employer and employee can terminate the contract. This can include notice periods, grounds for termination, and procedures to be followed. Failing to include these provisions can lead to disputes between employers and employees, potentially resulting in legal action.

Using Vague or Ambiguous Language

Employment contracts should use clear and unambiguous language to avoid misunderstandings or disputes. Vague or ambiguous language can be interpreted in different ways by different parties, leading to confusion and disagreements. It is essential to use precise language when setting out the terms and conditions of employment.

Not Updating Contracts Regularly

Employment law in Australia is constantly evolving, and employers need to keep their contracts up to date to reflect changes in legislation. Employers who fail to update their contracts regularly may find themselves in violation of the law or with outdated provisions that are no longer enforceable.

Failing to Protect Confidential Information

Employers have a duty to protect their confidential information, including trade secrets and customer information. Employment contracts should include provisions to protect this information, such as non-disclosure and non-compete clauses. Failing to include these provisions can leave the employer vulnerable to breaches of confidentiality.

Failing to Include Restraint of Trade Provisions

Restraint of trade provisions restrict employees from working in competing businesses for a certain period after leaving their current employment. Employers should include restraint of trade provisions in their employment contracts to protect their business interests.

Failing to Include Intellectual Property Provisions

Intellectual property provisions ensure that the employer owns all intellectual property developed by the employee during their employment. Employers should include these provisions in their employment contracts to protect their business interests.

Failing to Include Notice of Termination Provisions

Notice of termination provisions require either party to give notice before terminating the employment contract. Employers should include these provisions to provide certainty to both parties.

Failing to Seek Legal Advice

Employment law in Australia is complex, and employers should seek legal advice when drafting employment contracts to ensure that they comply with current legislation and protect their business interests. Employers who fail to seek legal advice may find themselves facing legal action due to mistakes in their employment contracts.

Conclusion

Employment contracts are essential for the employment relationship, and it is vital that Australian employers avoid these employment contract mistakes that can result in legal issues and financial losses for employers.

By including provisions such as a probationary period, minimum employment standards, termination clauses, clear language, regular updates, protection of confidential information, restraint of trade provisions, intellectual property provisions, notice of termination provisions, and seeking legal advice, employers can ensure that their employment contracts are legally sound, compliant with the law, and protect their business interests.

Employers who take the time to carefully draft their employment contracts will have more productive and mutually beneficial relationships with their employees, leading to a stronger and more successful business.

 

PeopleStart HR is a team of experts in employment law who can assist Australian employers in developing compliant and comprehensive employment contracts. With extensive knowledge of the latest legislation, they can ensure that employment contracts cover all essential aspects of the employment relationship, including probationary periods, minimum employment standards, termination clauses, clear language, regular updates, protection of confidential information, restraint of trade provisions, intellectual property provisions, and notice of termination provisions.

By engaging the services of PeopleStart HR, employers can have peace of mind, knowing that their employment contracts are legally sound and designed to maximise productivity and profitability.