5 Things every Employer should know about Employment Contracts

May 16, 2017

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If you’re about to start a new job or are in the process of renegotiating your current employment contract, here are a few things you should consider.

1. Don’t start work until you sign.
If you’re a new employee, you should never start work until you’ve signed an Employment Contract. If you’ve been handed a contract but started work before signing it, you’re still legally bound by the contract’s terms. You’ll therefore want to know what’s in it first.

It can be exciting starting a new job, but it’s important to fully understand each clause in your employment contract and its impact on you.  Take the time to read through it carefully and, if there are any clauses you don’t understand, seek clarification from your employer or an employment law expert before signing on the dotted line.

2. Understand your contract fully. 
It’s important to remember that an employment contract is a written legal document that lays out binding terms and conditions of employment between an employee and an employer.

Ask yourself: Do you know what should be in your contract? Do you know what award you are working under? Do you understand what the conditions of your employment are?

As a quick guide, your contract will probably include (but is not limited to) the following elements:

  • The general rights and obligations of the parties
  • Pay and conditions
  • Any flexible working arrangements
  • Procedure for any grievances that may arise
  • Severance pay
  • Confidentiality and ‘fidelity’ clauses (such as non-poaching of employees or clients upon exit)
  • Payment in lieu of notice
  • Any relevant industrial instrument, modern awards, national employment standards or statutory obligations
  • Non-competition clauses (also known as restraint of trade clauses)
  • Termination and redundancy guidelines.

3. Interview promises are not always contractual guarantees. 
Any promises made to you or conditions offered by an employer during your interview or provided via documentation prior to you starting work might not become an express term within your employment contract.

If you’ve accepted the job on the strength of such conditions speak to your employer directly – it may just be a case of drafting an amended contract to legally ensure your desired terms.

4. Contractual obligations are not always enforceable. 
Standard employment contracts are sometimes used as guidelines rather than strict codes of practice.

This can work both in your favour and against you should any disagreement about your contractual obligations arise during your term of employment.

From a legal perspective, such disagreements can be tested by determining “intention,” or whether a reasonable person would consider the person making the promise had intended to be bound by the statement.

5. Beware Restraint of Trade clauses.
These clauses are often an attempt by business owners to protect the goodwill of their business by preventing departing employees from taking clients with them or setting up a competing business for a period of time after they leave.

Sometimes the courts won’t uphold a restraint clause between employers and employees as they can effectively prevent an employee from working in his/her chosen field or from earning a living.  However, if the restraint is valid, you must not breach it or face a court injunction.

Restraint of Trade or non-competition clauses may therefore potentially have a serious adverse impact on your capacity to make a living. You should contact Paul Horvath Solicitors to get frank, comprehensive advice about what employment contracts might mean for you.

Please note: this blog post offers a general overview of employment contracts. If you have specific questions or concerns, please call us to explain your legal options. We’re here to help.