An employment contract is an agreement between an employer and the employee. A contract contains the terms and conditions of employment between the two parties and is the basis of the employment relationship. As surprising as it sounds, there is no obligation to have a written contract of employment in Australia but it is wise to have one as it protects the employer’s interests. On the other hand, all employees are covered by the National Employment Standards (NES).
A contract of employment is usually of two types which are “express” and “implied term”. Express terms are those that are mentioned orally or in writing. Implied terms are those that have not specifically been agreed upon but are too obvious to be recorded. Express terms include wages, hours of work, overtime hours, paid holidays and more. Implied terms include custom and practice and terms from the collective bargaining agreement.
Basic Employment Conditions
An employment contract should consist of:
• Compensation terms (salary, overtime rates)
• Hours of work
• Work Shifts
• Meal breaks
• Leave entitlements
• Flexible work arrangements
• Accommodation and travel arrangements
• Contract terminations
Other information that can be listed are the job functions, arbitration clauses, skill enhancement and training and non-disclosure of trade secrets.
Types of Employment Contracts
There are many types of contracts that can be used in the workplace such as:
• Full-time – employees work 38 hours per week
• Part-time – employees work less than 38 hours per week
• Casual – employees work hours may vary per week, depending on availability of work
• Apprentices/Trainees – people who are hired and trained in order to gain knowledge about the particular industry. Companies may benefit from financial help if they take on apprentices and trainees
• Fixed term – employees are generally employed for a fixed period of time
Click here to learn about the different advantages and disadvantages of each type of employment contract.
In some industries, employment conditions are set out in an award. An award is a legal instrument created by an industrial tribunal that sets out the employment conditions for a specific industry or occupation. Click here for further information.
Individual contractors are individuals who are self-employed and contract their services to other businesses. An example is an electrician who is specifically hired by a business to undertake all electrical work for the business. Independent contractors have different rights compared to employees.
These are the main components of the different types of working contracts in Australia.