Employment Contract
A legally compliant employment contract is the foundation of every employee relationship — setting out rights, obligations, and protections for both parties.
What is a Employment Contract?
An employment contract is the foundational document of the employment relationship. It sets out the terms and conditions of employment — role, compensation, hours, leave entitlements, confidentiality obligations, IP ownership, and termination — in a way that complies with the Fair Work Act 2009 and any applicable modern award.
In Australia, employment contracts operate alongside several layers of mandatory requirements: the National Employment Standards (NES), applicable modern awards or enterprise agreements, and the Fair Work Act. Any contract provision that provides less than the NES minimum is unenforceable to that extent, and the NES minimum applies instead.
When do you need a Employment Contract?
- ✓Before any new employee starts work in your business
- ✓When an employee's role, hours, or status changes materially
- ✓When updating employment terms to reflect current NES or award obligations
- ✓Before hiring in specialised roles where IP and confidentiality provisions are critical
Key provisions to include
Position & Duties
Job title, reporting line, primary responsibilities, and any flexibility clause for reasonable changes.
Remuneration & Super
Base salary, superannuation (currently 11.5%), and performance review timing.
Hours of Work
Full-time (38 hours), part-time, or casual status, plus any flexible or hybrid arrangements.
NES Leave Entitlements
Annual leave (4 weeks), personal/carer's leave (10 days), and other NES leave types.
Confidentiality
Obligations to protect business confidential information during and after employment.
IP Assignment
Explicit assignment of IP created in the course of employment to the employer.
Post-Employment Restrictions
Non-compete and non-solicitation clauses with reasonable scope and duration.
Termination & Notice
Notice periods, payment in lieu, and grounds for summary dismissal.
Common mistakes to avoid
Not checking modern award coverage before finalising the contract — award minimum rates often exceed the offered salary
Including non-compete clauses that are too broad — Australian courts will not enforce unreasonable restraints
Using an outdated template that predates recent NES amendments
Not getting the signed contract back before the employee's start date
Frequently asked questions
What is the difference between a modern award and an employment contract?
A modern award sets minimum pay rates and conditions for specific industries and occupations. An employment contract can provide better conditions than the award, but not worse. If an award applies, the contract must at a minimum meet the award rates. If the contract is silent on an award-covered entitlement, the award provision applies.
Can I employ someone on a fixed-term contract?
Yes, but with care. Under the Fair Work Act, employers are limited to two consecutive fixed-term contracts for the same role with the same employee, with the total period not exceeding 2 years. After this, the employer must either offer ongoing employment, let the employee go, or establish one of the limited exceptions.
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