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The importance of written employment contracts

A question I am often asked by employers is whether it is necessary to enter into written employment contracts with their employees.

In Australia, there is no legal obligation on employers to have written employment contracts with employees. However, the importance of written employment contracts cannot be overstated.

An employment contract is a legally binding agreement between an employer and employee, and is designed to offer protection and security to both parties.

The purpose of an employment contract is to ensure that both an employer and employee have a clear understanding of what is expected during the period of employment.

 A well-drafted employment contract creates certainty as to the terms and conditions of the employment relationship and will protect an employer in the event that a dispute arises with an employee in relation to the terms and conditions of employment.

A written employment contract also provides employers with an opportunity to clearly express their expectations of employees by setting out the employee’s position description and the duties the employee is required to undertake. Having a written contract that defines the standards expected of each employee is a great way to get the best out of each staff member. It also means that if an employee is consistently underperforming or not meeting the standards set out in the contract, an employer has clear grounds to take action to manage that employee’s performance.

A written employment contract should be tailored so that it carefully reflects the agreement between the employer and employee. There is really no “one-size fits all” approach, as the terms of the contract will depend on things such as the seniority of the employee, the nature of the role and the needs of the employer’s business.

If you are an employer and would like assistance with preparing or updating employment contracts, please get in touch by calling us or visiting our website at www.mullanelindsay.com.au.

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