Employment contracts are the backbone of healthy employer/employee relationships. They spell out the conditions of the job in a mutually binding agreement between you and your employees.

Many people in small business wrongly believe that their business isn’t big enough to warrant employment contracts. However, the truth is as soon as a business is big enough to have even a single employee, whether full time, part time or casual, it’s important to stipulate in writing what the terms of employment are. Employment contracts allow everyone to be clear about the terms of a job, and the expectations of both parties. They also protect both parties in the event of a legal dispute.

What’s in an employment contract?

A contract is a legally-binding document, and, in essence, it needs to contain three core pieces of information:

  • an agreement to do something (an Offer)
  • an intention to make a legally binding agreement (an Acceptance)
  • an exchange of something which is of value (the Consideration).

Each of these are important, and if any are missing the contract isn’t legally enforceable.  It’s worthwhile having any contract you draw up checked by someone experienced in this area. Assurance HR can help with that. Give us a call on 1800 577 515 for advice on your contracts.

Other things to be considered in an employment contract include:

  • Legislation relating to various employment conditions (such as leave and rates of pay)
  • Previously agreed-upon arrangements
  • Any particular customs or practices in your workplace
  • Any professional practice rules  that apply to the workplace
  • Information regarding workplace policies and employee handbooks

When are employment contracts needed?

If there’s ever a dispute as to rights, promises, expectations or agreements the first thing you’ll refer back to is your employment contract. If it contains the three core ingredients—offer, acceptance and consideration—then it becomes the benchmark you’ll use to resolve the dispute. If either party has breached the contract Assurance HR can help you take the next steps, whether it’s disciplinary or legal action, or helping put things in place so such a breach doesn’t happen again.

How often should they be reviewed?

As businesses change and grow, and people’s roles evolve over time, it’s worth reviewing and updating employment contracts every twelve months, or more, if legislation and the nature of the role changes more frequently.

Ideally a contract should be updated before any significant changes to the role. Outdated contracts can be difficult to deal with (and potentially expensive) in the event of a dispute. Please note that where changes to an employment contract are required, both parties (the employee and employer) must mutually agree on such changes.

Employment contracts may seem like a large investment of time and/or resources when a business is small, but are one of the best investments you can make in the health and future of your business. No matter where you are on the business journey, it’s worth reviewing your contracts today.

Have questions? Assurance HR are here to help! Give us a call today on 1800 577 515.

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