Helping Small Business Create Employment Contracts
Business.gov.au have created a build your own employment contract, for an employee under Australia’s Fair Work System, that is tailored to your business needs. Making your employee’s pay and conditions clear from the start can help protect your business in the long term.
It helps small business employers to make a basic employment contract that complies with workplace laws. ICB recommend this tool for small businesses to create a contract for an employee under the national industrial relations system. It can be used for full-time, part-time, and casual employees who are covered by an award. For more information: business.gov.au – Get started Employment Contract Tool
In the tool you’ll find:
- Conditions that you must provide to your employee.
- Optional clauses to help set expectations and protect your business.
To use this tool, you’ll need to pay your employee an hourly or weekly wage. Salaries are not provided in the tool due to their complex requirements but if you're not sure what the award is, use the Fair Work Ombudsman’s Find my award (fairwork.gov.au).
Be aware it is not suitable for some workers:
The Contract Tool
The contract tool takes you through several steps and helps a business with all the things that should for an employment contract
Prepare a position description:
You’ll need to attach the position description to your final contract when you give it to your employee. If you provided a position (or job) description during your recruitment process, use this. If you don’t have a position description yet, you can download the job description template from the Fair Work Ombudsman website and fill it in later.
Award for your employee:
What is the name of the award that applies to your employee? If you're not sure which one applies, use the Fair Work Ombudsman’s Find my award tool. It is important you provide the right entitlements from the correct award. If you don’t, you could face fines and penalties.
You’re going to need to provide some details from the award, including:
- base pay
- hours per week – if they’re part-time or full-time
- how often you must pay your employee
- days and times they'll work – if they’re part-time or full-time.
As you work your way through the tool, follow the guidance to add, at least, the minimum pay and conditions from the award.
You will be required to add a work add a workplace address and may also be required to work at other locations where reasonable.
It’s important you get this right. The conditions for each type differ, so it will change what you get in your contract.
- Full time – usually 38 hours of work per week.
- Part time – usually less than 38 hours of work per week.
- Casual – no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
This part is particularly helpful for Casual Employment and helps to define “Casuals” and explains how the rules have changed.
When engaging someone as a casual, you need to:
- consider if the position being offered meets the definition of casual employment.
- provide the Casual Employment Information Statement.
- be aware of the right for casuals to become a permanent employee in some circumstances.
Make sure you understand these obligations for casual employment outlined on the Fair Work Ombudsman website.
Other Sections to Fill In:
- Employment dates: Make sure to enter the correct employment commencement date.
- Are they a shift worker? If so, check award and the “hours of work” clause.
- Are they on call or standby? Check on-call or stand-by conditions will be in accordance with the award.
- Rosters: Check the award rules for rosters on the Fair Work Ombudsman’s Rosters page.
- Breaks: Entitlements to breaks vary between awards, so check the award for details.
- Payment Method: Check how often you have to pay by selecting the employee’s award on the Fair Work Ombudsman’s Paying wages page. Confirm how you will be paying wages (bank account, cash, or cheque).
- Superannuation: Check all the rules around payment of superannuation or additional super.
- Penalty rates and overtime: You must pay overtime or penalty rates if your employee is entitled to them, even if you do not include this clause.
- Allowances: Your employee may be entitled to allowances in accordance with their award.
- Commission: Include this if you plan to pay your employee commission on top of their wages or salary.
- Annual bonus
- Annual pay review
- Parental leave & Additional parental leave
- Annual Leave
- Personal/carer’s leave
- Compassionate leave
- Community service leave
- Family and domestic violence leave
- Public holidays
- Long service leave
- Employee obligations: Include this to set expectations of your employee to act in the interests of your business and to follow your policies and procedures.
- Conflict of interest: Include this to ensure your employee gets your permission before working for others or doing activities that could conflict with your business interests.
- Confidentiality: This sets out the requirement for your employee to keep confidential information private.
- Intellectual property: Include this to protect your business’s intellectual property (IP). This includes designs, logos, business and domain names, copyright, trademarks, and patents.
- Consultation for workplace changes: You must consult with your employees about major changes to the workplace, their regular roster, or ordinary hours of work
- Disputes: Include this to get an overview of the process for resolving disputes in your employment contract. The award sets out this process.
- Notice Clause: A notice period is the length of time that you and your employee have to give to end employment. Notice periods do not apply to casual employees.
- Misconduct: This sets out that you can dismiss (fire) the employee for serious misconduct without notice.
Once you have filled in all the details listed above you can review and download the template and fill in personal details.
This tool is aimed at building provisions into a contract template that leads businesses down the right path to compliance. The tool takes business owners through all the processes needed to be considered in an employment contract.
Note: Although this is a useful resource to have in a Bookkeeper’s toolkit, ICB strongly recommends appropriate HR advice be obtained by employers.