What should you put in a written agreement?
Kimberly Jones • Oct 29, 2019
An employment agreement exists within every employment relationship, however, without a written employment agreement, uncertainties may arise as to the rights and obligations of both parties. Having assisted many clients with employment related disputes, usually at the end of the relationship, we understand how important it is that both parties are clear about their rights and obligations from the beginning.
Is a written employment contract necessary?
We believe that your employees are a great asset to your business; they can ensure your business goes from strength to strength. However, with any opportunity there is also risk. An employee that does not perform well will eat into your time and any profits, may threaten your business’ reputation, and may leave you vulnerable to the risk of legal action by a third party.
Very few businesses would make a major investment in equipment without a written agreement in place to help protect the business in case the equipment is faulty or doesn’t do what it should, so why take this risk with your staff?
First and foremost, by writing down your expectations and requirements, as well as how the parties should deal with any problems that may occur, you are making sure both you and your employee are on the same page. Without a written contract, oral and implied terms may be relied upon by either party, bringing uncertainty into the relationship.
This article in our Bailiwick Workplace Series will provide guidance about some of the terms that we recommend to include in your written employment agreements. This is of course not exhaustive and we always recommend that a legal professional draft or at least review your employment contract prior to proving it to your employee.
Key Terms to think about:
1. Remuneration
One obviously important term required is to set out what an employee will be paid.
Minimum remuneration may be set by an award or industrial agreement, or you may need to refer to the applicable national or State minimum wage. If you are unsure as to any minimum terms of employment, including minimum wage, there are resources available to assist you through both:
- the Fair Work Ombudsman website: https://www.fwc.gov.au/awards-and-agreements/minimum-wages-conditions, for federal system employees; and
- the Department of Mines, Industry Regulation and Safety: https://www.commerce.wa.gov.au/labour-relations, for State system employees.
Many of the queries we receive involve minimum remuneration rates and how these are calculated, and we are happy to assist if you find this issue confusing or want reassurance that you are meeting your minimum obligations.2. Role and Responsibilities
We are often approached by employers who are involved in a dispute about why an employee was dismissed. One reason that is often cited is that the employer believes that the employee has not performed their role to a satisfactory standard. However, if the employee and employer are not clear in the beginning as to what is expected of the employee, it can then be difficult to justify a dismissal based on unsatisfactory performance.
Even if a dispute does not ensue, an employer will struggle to achieve the best from an employee if that employee is not clear on the scope of their role.
If the role changes over time, an amended agreement or position description should be prepared.
3. Restraint of Trade/Confidentiality
How important is protecting information, ideas and trade secrets (such as intellectual property) to your business? This is a question you should be asking prior to engaging an employee to work within your business.
A confidentiality clause can protect your business by ensuring that employees keep your information, including intellectual property, private and confidential throughout the employment and after the employment relationship ends.
A properly drafted restraint of trade clause can prevent an employee from performing work or from joining a competitor or becoming a competitor after the cessation of their employment. It is important to note here that there are limits on the enforceability of restraints based on how reasonable the restraint is in the circumstances. These limits are often around the geographical area of restraint and how long the restraint is for.
4. Notice of Termination
Another important clause to include in an employment contract is the period of notice required to terminate the contract. There are minimum requirements set by legislation, awards and enterprise agreement, and your employment contract cannot provide for less notice than these minimum requirements. The minimum notice period an employer must give is based on the employee’s continuous service with the business.
An important matter to note is that, if no period of notice is specified in an agreement, a ‘reasonable notice’ notice period will be implied into the contract. Even though a minimum notice period exists in legislation or an award, any implied notice period may be longer. The employee’s notice period may not automatically fall back to a minimum requirement if an agreement is silent on the issue of notice.
What is ‘reasonable’ can vary in different situations. If an employee wishes to be paid for a ‘reasonable notice’ period, the employee’s idea of reasonable may well be very different from their employer. As you may imagine, such a difference in opinion can lead to a costly and time-consuming dispute.
In your employment contract you should consider notice periods applicable under different circumstances, for example who is giving notice, is the termination a result of a breach of the agreement, or because the employee has acted in a way so serious that the employer may be justified in terminating the employee’s employment immediately and without notice.
Where next with your contract drafting?
Not all written employment agreements are created equal. At Bailiwick Legal we assist employers to avoid unnecessary risks when engaging an employee or varying the terms of employment. Having a well-drafted comprehensive contract, with clear terms, goes a long way to avoiding future litigation and disputes and maintain a happier workplace.
The five clauses mentioned in this article are just some of the employment terms to consider, however, they are by no means exhaustive.
Every employment situation is different, which is why using a standard template will rarely be as effective as engaging a professional to draft or review your employment agreement. Your employment agreement should reflect your business, your priorities and your unique relationship with your employee.
For further information in relation to employment contracts for your business or other assistance with your employment matters, please contact us on (08) 9321 5451. For further information about our legal services, please visit our website: https://www.bailiwicklegal.com.au/
The above information is a summary and overview of the matters discussed. This publication does not constitute legal advice and you should seek legal or other professional advice before acting or relying on any of the content.
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The Human Rights Commission may take action against employers who fail to actively eliminate sexual harassment, discrimination and victimisation in the workplace, as part of a positive duty reform. While the reform itself was introduced under the Sex Discrimination Act in 2022, a change was put in place last December - and every employer, including those in the agricultural sector, is affected. This change has provided the commission with new powers to investigate and enforce compliance with positive duty and investigate organisations or businesses where it "reasonably suspects" non-compliance. What does this mean for shearing contractors, sheep producers and other primary producers? Speaking at the WA Shearing Industry Association (WASIA) general meeting last month, Bailiwick Legal solicitor Matilda Lloyd said the enforcement power involved inquiries and investigations similar to WorkSafe. She said a complaint did not have to be made for an inspector from the commission to visit and look over a workplace, and see if there is any kind of sexual harassment occurring. "The commission looks at policies and procedures, and essentially you need to be able to demonstrate that you're compliant with this positive duty. "When you think about it in the context of a shearing shed, it is the safety checklist you have in place for when people enter the shed. "Those are the things you need to consider with sexual harassment as well." Ms Lloyd said the commissioner never had the power to conduct an investigation before and, as such, practically how it was going to work was an unknown. "We don't know whether they're going to be coming out and doing regular inspections, what those inspections are going to look like in terms of time or how thorough they are going to be, " sh e said. "They need to be thought of the same way as a WorkSafe investigation, whereby it could happen at any point whether a complaint is made or not. "Investigators will expect employers to show that they are actively trying to eliminate this form of unlawful conduct." If an inquiry occurs, what will happen? If an employer wasn't taking the correct measures to stop sexual harassment, discrimination and victimisation from occurring, they could be issued a compliance notice. Ms Lloyd said if the notice wasn't adhered to and an inspector returned, they could apply to the Federal Court to have that positive duty enforced. What is positive duty? Ms Lloyd said a positive duty was a legal obligation on an employer or person conducting a business or undertaking to take reasonable and proportionate measures to eliminate unlawful behaviours in the context of work, workplaces and working relationships. In the case of shearing contractors, sheep producers and other primary producers, she said that obligation was on the employer and applied to all staff, workers, contractors, customers and people entering, for example, a shearing shed. She said the obligation was "very broad" and applied right across the board. "Enforcing positive duty is pretty straightforward in terms of the employer, but when we look at the other parties involved it is extensive, " Ms Lloyd said. "When we are talking about sexual harassment in the workplace we are talking in the shed and in a vehicle on the way to work or another shed. "It is also offsite, so if you are having work drinks at the quarters or wherever afterwards - that's also a workplace within the definitions of the act. "The obligation applies across the board in all of these circumstances. "And also applies to visitors, so if you have farmers and they bring their wives, it is anyone coming into that shed or environment." In the context of positive duty, what do contractors need to do? Firstly, employers need to understand what sexual harassment, sex-based harassment, discrimination and victimisation is. Ms Lloyd said employers were responsible for leading their team, so it was important to understand what the laws were and how they affected not only them, but their employees. "When we talk about sexual harassment we talk about unwelcome conduct that is of a sexual nature or requests for sexual favours, touching, requesting dates and so forth," she said. "Whereas sex-based harassment is harassment that is targeted at a particular sex. "This could be making sexist comments about a woman because she's a woman or making sexist comments about a man because he's a man. "Then victimisation is about targeting someone because they've made a complaint." Ms Lloyd said a conversation then needed to be had to educate employees, whether that be face-to-face, by Whatsapp or having it displayed in the shed. She said there were resources and guidelines available through the Human Rights Commission, which helped with this. "Have that conversation - as an employer understand what sexual harassment is but then talk to your employees and be serious about educating your employees, " Ms Lloyd said. "It is about actually having that conversation and then thinking about what material can be given to them. "The whole point is to make it easy, so people understand. "Then it goes into training and support - is there someone in your team people can talk to?" The seven standards The commission has released guidelines for complying with the positive duty under the Sex Discrimination Act 1984. The guidelines are centred around seven standards - leadership, culture, knowledge, risk management, support, reporting and response, and monitoring, evaluation and transparency. Examples of practical actions that organisations or businesses can take to meet each of the standards are set out in the guidelines. Ms Lloyd said, as each business is different, it depended on how big a team was, what was going to be practical and cost-effective in the workplace. She said the commission would look at the different standards if there was an investigation or inquiry. How often do employers need to talk to their team about this? Ms Lloyd said it should be looked at similarly to safety or work related issues, whether that be a toolbox or regular meeting once a week or every couple of days. She said if a contractor was starting a new job or visiting a place they hadn't been to before, it was about having that conversation upon arrival. "When everyone's preparing for their first break, sit down and have a chat about general safety as well, " Ms Lloyd said. "That's the first step, and then follow it up a month later when you start a new shed. "It is about consistently and actively taking measures to create a safe space. "It seems obvious that once you've gone through your checklist you then talk to the people coming into that environment, who are your workers, and alert them to what you have found. "Similarly, with positive duty, a checklist is proof that you are doing the right thing if you are audited." Does insurance cover sexual discrimination cases? Having insurance does not diminish positive duty, it just safeguards employers against potential damage and loss against their business if they are sued. Ms Lloyd said sexual discrimination cases, which travelled through the Federal Court, were not cheap and often have adverse outcomes from an award of damages perspective. "If we talk about Work Health and Safety, as you know, that is a serious issue you have to take onboard and consider, " she said, "And that's the way I think employers need to frame their conduct when talking about and implementing measures to prevent sexual harassment, discrimination and victimisation." Is an employer covered if they have put everything in place, but those rules are still broken? Ms Lloyd said an employer would be protected if they have been able to eliminate as much as they can with the resources available to them. She said it was important to remember sexual harassment and discrimination is unlawful conduct. "In terms of positive duty, by taking all reasonable steps and measures given the resources available to you, you will be able to mount a solid defence against any claim. "If you've done your duty positively and it can be demonstrated that you've exercised your role in appropriate fashion, then that will be solid defence." For more information on the positive duty reform and seven standards, go to humanrights.gov.au
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