Business-friendly clauses you should include in your employment contracts.
In Australia, employment contracts must meet the minimum requirements set out in National Employment Standards (and any relevant Modern Awards). It’s also important for the benefit of your business to make sure you include a few fundamental clauses in your employment contracts.
Author: Farrah Motley, a Solicitor of the Supreme Court of Queensland
This law article outlines some business-friendly clauses which you should set out in your employment contracts.
1. INTELLECTUAL PROPERTY
Ensure your business owns any intellectual property rights your employee might create or contribute to during the course of their employment. Without this, intellectual property may automatically be owned by the employee, not your business.
If a Modern Award applies, include a set-off clause. If drafted properly, these entitle your business to set off an annualised salary (to the extent the employee is paid over and above the Award rate) against any outstanding entitlements. If you don’t include a set-off clause, your business may be required to pay particular Award entitlements in addition to the annualised salary (plus potential penalties which may apply).
3. COMPANY POLICIES
If you have or are in the process of creating company policies, make sure the employment contract requires the employee to comply with the business’s policies (but be careful to ensure they are not incorporated into the contract).
4. TERMINATION RIGHTS
The employment contract should set out all the ways in which the employment relationship can be terminated (including for serious misconduct). You should ensure the clause is as detailed and broad as possible; if something goes wrong, you want to make sure you can terminate the employment relationship and minimise the impact to your business.
5. PROBATION PERIOD
An employment contract should address the probationary period. Although a claim for unfair dismissal cannot be brought until an employee has been employed for at least six months (think of it like a statutory probation period), they may still raise a general protections claim if they are terminated during the probationary period. You want to make sure you have a broad right to terminate the employment contract, for any reason, during the first six months.
Having said all that; employment contracts don’t need to be long, intimidating documents that no one looks at. It’s important to start the employment relationship off on the right foot and to do this you may want to consider framing the employment contract in a friendly ‘letter’ format. The welcome letter can take front-and-centre, and those all important, carefully worded terms and conditions can take their place as an attachment.
Author: Farrah Motley | Legal Principal
PROSPER LAW - A Law Firm for Businesses
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