A strong, watertight employment contract, compliant with current employment legislation, can protect employers from potential lawsuits and keep employees from breaching the terms.

So what information should you include in employment contracts to ensure they’re watertight?

The purpose of an employment contract

Employment contracts contain details such as remuneration, leave, duties and responsibilities, maternity or paternity leave, sick leave, reasons for termination and so on. They spell out the duties and expectations from the employee and employer and act as a reliable source or reference in the event of a dispute.

Drafting a proper employment contract also ensures the protection of confidential information and important company data. Most importantly, the terms and conditions in a signed legal employment contract are likely to be upheld in court, in case of any problems, as opposed to verbal agreements.

Well-structured employment contracts reduce the likelihood of expensive and stressful lawsuits that can waste your valuable time and financial resources.

What to include in an employment contract


The contract should specify the hours of work, the nature of duties, probation period and location of work. It should also include employment type (fixed, contractual, part-time, etc.) and qualifications required for the position.

Salary, Overtime and Leave Pay

Employment contracts should specify gross and net salary, rate for overtime pay, if applicable, and annual or monthly leave pay. Please state transparent overtime pay for weekends and after-hours.

Health and Safety Regulations

According to Australian laws, every employer is responsible for the wellbeing of employees. Please include workplace rules and regulations regarding PPE, safety equipment and precautions.

Termination of Employment and Notice Period

It’s crucial to include reasons for termination and how the employer or employee can terminate employment. We strongly recommend following the regulations included in the National Employment Standards.

Confidentiality, Restraint of Trade and Intellectual Property

The contract must specify legal consequences for poaching clients or interfering with employer-supplier relationships after termination of employment. Employees are expected to respect company confidentiality at all times. The employer should have legal rights to intellectual property created by an employee during the employment period.

Every Australian employer should ensure that a prospective employee signs an employment contract before commencing work. The terms and conditions included in an employment contract will vary depending on the type of employee you are looking to recruit. For example, the employment contract for hiring a foreign, temporary employee may be different from a contract to hire a local worker.

Two common mistakes employers make in employment contracts

  1. Failure to Comply with the Latest Amendments – Employment contracts are often out of context with the latest legislations in the National Standards Act. It’s essential to stay compliant with the latest updates, especially during the volatile aftermath of the COVID outbreak. Failure to stay current may result in penalties and punitive action.
  2. The Employment Contract is Ambiguous – If the contract contains broad and ambiguous terminology, this makes it harder to resolve disputes that may arise. Employers should ensure that the contract is clear and concise, leaving no room for confusion and misunderstanding.