NEVER USE A GENERIC EMPLOYMENT CONTRACT

We have seen it many times: A small business owner, with no internal HR resources, stressed and overworked, downloads and uses a generic employment contract and ‘just gets someone in to help’.

While this may look attractive initially to a young employee looking for ‘flexibility’, inevitably it leads to disputes involving breaches (at times, inadvertent), by the employer, of the Fair Work Act 2009, the minimum National Employment Standards, underpayment claims, litigation and, at times, penalties being imposed on the employer. Using a generic employment contract as it can lead to such issues.

The following are some reasons why this will always go wrong:

1. Without any clear role description or list of expected tasks at commencement of employment, it is impossible to accurately determine the classification under an Award or Instrument – so there cannot be an accurate determination of the appropriate hourly rates / allowances / leave entitlements / other conditions. This is a common issue when you use a generic employment contract.
2. This issue of no proper classification is left to be determined at the time of the later dispute, in hindsight, and often with disputed versions of the tasks performed and responsibilities undertaken. A generic employment contract often lacks this clarity.

 3.It is impossible for the employer to comply with record-keeping requirements of the Fair Work Act;

4. It is impossible to establish any performance management process as there is no framework or guidelines against which the worker’s performance may be assessed. A tailored employment contract is necessary for this.
5. The employer has often lost the opportunity to protect their confidential information, or to have an enforceable restraint of trade clause in the employment contract.

Without a clear and concise Employment Contract, tailored to the specific requirements of a role and an employee, the relationship of employment has no structure other than that provided by the Fair Work Act and the National Employment Standards. The employee is vulnerable to underpayment, uncertainty and inability to grow within a role; the employer is left without any means of performance management and is exposed to claims and penalties for breaches. This is particularly true in employment contract Australia where specific regulations must be followed.

In the workplace, clear and specific communication is key – and this must start at the beginning, with a tailored employee-specific Employment Contract.