Employment and HR
Employment and HR document

Employment Contract

Our Cleardocs Standard Employment Contract enables you to clearly set out the terms and conditions of the employment relationship between your organisation and an employee. The Cleardocs Standard Employment Contract complies with the Fair Work Act 2009 (Cth) and the National Employment Standards (NES) in force at the time of purchase of the contract.

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Product Benefits
  • Complies with employment legislation
  • Copy function for address details — saving you typing
  • Customise for your organisation's needs
  • Covers full time, part time and non-senior employees
  • Easy to use question interface
  • Extensive online help and local phone support
Product Information

What documents are included in the Cleardocs Employment Contract package?

The Cleardocs employment agreement document package includes:

  • your tailored Employment Contract; and
  • an Establishment Kit telling you what to do next.

What information do you need to order a Standard Employment Contract through Cleardocs?

Download our checklist for the information required to order a Standard Employment Contract

Tailoring the standard employment contract to the needs of your organisation

The Cleardocs system enables you, when preparing your employment agreement, to choose between common clauses in the employment contract to suit the needs of your organisation and the individual employee. For example, within legal limits and subject to the requirements of any applicable Award or enterprise agreement, you may customise the employment contract to reflect the employee's:

  • job description;
  • pay;
  • working hours and days of the week;
  • place of work; and
  • annual leave entitlements.

The Cleardocs interface also enables you to choose whether to include particular clauses in the employment agreement depending on their relevance. For example, you can choose to include clauses to reflect whether:

  • the employee is full or part time;
  • the employee has a probationary period — you may choose how long this period may be;
  • the employee has a commission arrangement; or
  • the employee is entitled to be part of a bonus scheme.

For which employees is the employment contract relevant?

The standard employment contract is relevant for most:

  • full time staff;
  • part time staff; and
  • non-senior employees.

Links to employment legislation and industrial agreements

Most employer/employee relationships are covered by the Fair Work Act 2009 (Cth) (including the National Employment Standards (NES)) and other industrial awards or agreements. You need to know which of these apply to your organisation. To understand the obligations that apply to your organisation, see:

Also, you can call the Fair Work Infoline on 13 13 94 between 8am-5.30pm local time, Monday-Friday.

If the employer is in Western Australia, then its employees may fall under the WA State system — unless:

  • the employer is a trading or financial corporation; or
  • otherwise covered by the Fair Work Act 2009 (Cth) and the Federal system.

You should seek advice on this issue.

You can get more information about who is (and isn't) covered by the Federal System from Fair Work Australia.

Seek legal advice

The Standard Employment Contract information here should be considered general in nature, and in no way interpreted as legal advice. You must always seek your own independent legal, accounting and financial advice about your particular situation. The summary on this page is for information purposes only.

Frequently Asked Legal Questions

Cleardocs is not a law firm. So as with all the legal material on this site, the answers to these "frequently asked legal questions" are provided by the law firm Maddocks. Cleardocs does not endorse those answers.

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When was this information last updated?

The Cleardocs Standard Employment Contract template, establishment kit and these FALQs (Cleardocs Materials) are current as at 30 September 2019. We note that applicable legislation may change from time to time and accordingly you should seek independent legal advice regarding your particular circumstances before relying on Cleardocs Material.

Cleardocs makes no representations or warranties in relation to the quality, accuracy, or completeness of the Cleardocs Materials. The comments set out in this FALQ document are of a general nature only and are not a substitute for specific legal advice for your particular circumstances.

Maddocks recommends that you seek independent legal advice or contact the Fair Work Ombudsman if you are unclear on your obligations in respect of minimum entitlements for your employees (including modern award or enterprise agreement coverage), or if you have any queries regarding the employment relationship generally.

Is the implementation of the Standard Employment Contract sufficient to discharge my minimum obligations to employees under applicable legislation?

In short, you should seek independent legal advice regarding your particular circumstances in order to ensure compliance with minimum legal requirements. The implementation of an employment contract template (or 'common law contract') using Cleardocs should only be considered in conjunction with an assessment of any industrial instruments that may apply to an employee.

The implementation of a common law contract alone without consideration of and compliance with any applicable industrial instruments will not provide an employer with protection from potential underpayments or other contraventions of the Fair Work Act (FW Act). A common law contract will operate subject to any applicable industrial instruments.

Employers who are considering using the Cleardocs Standard Employment Contract are strongly recommended to ascertain whether their employees are covered by any industrial instruments, including modern awards, before taking steps to implement the Standard Employment Contract.

We have set out some high level comments regarding enterprise agreements, modern award coverage and the interaction between industrial instruments in the below FALQs.

Can the Standard Employment Contract be used for casual employees, full-time and part-time employees?

The Employment Contract is designed for use for full-time and part time employees only. It is not suitable for use for casual employees or employees engaged on a fixed term or maximum term basis.

It is also not suitable for use for independent contractors. We have set out some high level comments on this point below in the FALQ titled : "What is the relationship between the Standard Employment Contract and industrial instruments (including Modern Awards)?".

Part time employees

In general terms, a part-time employee:

  • works, on average, less than 38 hours per week;
  • usually works regular hours each week;
  • is entitled to the same benefits as a full-time employee, but on a pro-rata basis;
  • is usually a permanent employee.

Part time employees are entitled to the same entitlements (such as sick leave and holiday leave) as a full-time employee, based on how many hours they work each week (ie on a pro-rata basis).

Many employees are covered by modern awards, which typically set out minimum requirements including hours of work, rostering and span of hours. In the case of part employees, the pro-rata leave entitlements may differ according to the relevant award which applies to the employee.

See below at FALQ entitled: "Are my employees covered by a Modern Award and, if so, what do I need to be aware of when using the Standard Employment Contract?" for our high level comments on modern award coverage.

Can the Standard Employment Contract be used for senior employees, such as executives or directors?

The Standard Employment Contract is not suitable for senior employees such as executives or directors. Senior employees should ideally have additional obligations in their employment contracts, which the Standard Employment Contract does not contain. For example, a contract for senior employees should generally include the following:

  • restraint of trade;
  • conflict of interest;
  • insurance coverage; and
  • confidentiality and other obligations.

You should seek independent legal advice if you require an employment contract for a senior employee or director.

The lawyers at Maddocks are able to provide a tailored employment contract suited to more senior employees for the payment of an additional fee. To arrange this, please call Cleardocs on 1300 307 343.

Is the Standard Employment Contract suitable if there is an enterprise agreement in place that covers my employees?

An enterprise agreement is a collective agreement which sets out the minimum employment conditions for a group of employees, and can apply to one business or a group of businesses. It must be filed with and approved by the Fair Work Commission.

If your organisation is covered by an enterprise agreement, the agreement will apply to the exclusion of any applicable modern award. However, the modern award underpins the enterprise agreement and accordingly if the base rates of pay in the enterprise agreement are lower than those in the applicable award, those set out in the modern award will apply. The National Employment Standards (NES) continue to apply.

If your employees are covered by an enterprise agreement, it may not be appropriate to implement a Standard Employment Contract in addition to the enterprise agreement. This is because the terms and conditions of their employment will likely be set out comprehensively in the relevant enterprise agreement and as such, it is unnecessary to duplicate terms and conditions in a common law contract. There is a risk that, by implementing a Standard Employment Agreement in addition to the enterprise agreement, you will create further obligations for your organisation to comply with.

In such a case, it may be more appropriate to issue a letter of offer to employees which refers to the enterprise agreement.

You should seek independent legal advice on your specific circumstances or call Cleardocs on 1300 307 343.

We recommend that a simple employment letter be issued to these employees. The lawyers at Maddocks are able to provide a tailored employment letter for the payment of an additional fee. To arrange this, please call Cleardocs on 1300 307 343.

Are my employees covered by a Modern Award and, if so, what do I need to be aware of when using the Standard Employment Contract?

A modern award is an instrument that sets out the minimum terms and conditions of employment on top of the NES. Modern awards are industry or occupation specific, and apply to employers and employees who perform work covered by the award. The question of modern award coverage can be complex and we recommend that you obtain independent legal advice regarding your specific situation.

Modern awards can include terms relating to:

  • minimum wages, including annual wage or salary arrangements;
  • types of employment (for example, full-time, part-time, casual, shift worker);
  • work arrangements (for example hours of work, spread of ordinary hours, rostering restrictions);
  • extra amounts payable for work outside ordinary hours, including overtime and penalty rates
  • allowances
  • annual leave loading and arrangements for taking leave;
  • superannuation;
  • procedures for consultation, representation and dispute settlement; and
  • other entitlements.

As outlined in our General Information, determining whether or not a modern award applies to your workplace is complex. We recommend that you seek independent legal advice regarding your specific circumstances.

The Fair Work Ombudsman can provide general information on modern award coverage. You can contact the Fair Work Infoline on 13 13 94 between 8.00am - 5.30pm local time, Monday - Friday. You can also consult the Fair Work Ombudsman's Modern Award Factsheet and Award Finder Tool, accessible at: https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/modern-awards

What is the relationship between the Standard Employment Contract and industrial instruments (including Modern Awards)?

As noted above in paragraph 2, the rules of interaction between industrial instruments are complex and you should seek independent legal advice regarding your specific circumstances.

A common law contract will be subject to the NES and any applicable modern award or enterprise agreement.

An employment contract cannot provide less generous conditions than, or otherwise contravene, the NES and any applicable modern award or enterprise agreement. An employer cannot 'contract out of' or undercut an employee's minimum entitlements under the NES or any relevant award or agreement, even if the employee agrees to it.

While Cleardocs has taken care to ensure that the Employment Contract kit complies with the NES and Fair Work Act (FW Act) as at 30 September 2019, you should seek independent legal advice as to whether any industrial instrument applies to an employee before implementing a Cleardocs template

If you need assistance about the interaction of industrial instruments with the contract, please seek independent legal advice or contact Cleardocs on 1300 307 343.

How can an employer determine the applicable rate of pay?

We have set out in the Standard Employment Contract Document Package some preliminary information regarding how an employer can determine an employee's applicable rate of pay, including the importance of identifying whether an employee is covered by an enterprise agreement or modern award.

When populating the Standard Employment Contract template, you will be prompted at the section headed 'Pay' to select whether the employee is paid an 'annual salary' or 'hourly rate' of pay.

If you select the option of 'annual salary', you should ensure that the total remuneration payable to the employee under the contract is sufficient to meet the minimum entitlements under any applicable industrial instrument (including penalty rates or overtime) and the NES. You should also ensure that you have met any administrative requirements associated with an annualised salary arrangement, as may be stipulated in an applicable modern award, including any requirement to separately document the arrangement in writing and conduct an annual reconciliation.

We recommend that you seek independent legal advice if you are unsure about your obligations in respect of annual salary arrangements.

Is my employee a shift worker?

A further consideration for employers is whether an employee is appropriately characterised as a 'shift worker', as this generally attracts additional entitlements.

A shift worker is an employee who works shifts and receives an extra payment for working shift hours. While the FW Act contains a definition for shift worker, it is important to note that a modern award or enterprise agreement can also include a specific definition of what a shift worker is and what entitlements they are afforded.

For example, under the NES, a seven-day shift worker (as defined by an award/agreement) is entitled to five weeks annual leave each year. A shift worker employed under a modern award or an enterprise agreement who takes annual leave is entitled to be paid the actual wage which would have been received for ordinary time (including shift allowances and weekend penalties), or a 17½ per cent annual leave loading, whichever is the greater.

A number of modern awards also provide that any overtime worked by a continuous shift worker is to be paid at double time.

If you require advice regarding shift workers, you can contact the Fair Work Ombudsman on the Fair Work Infoline on 13 13 94 between 8.00am - 5.30pm local time, Monday - Friday.

You can also consult the Fair Work Ombudsman's Shift Worker Award Tool, which provides tailored information about shift workers in the relevant award. The tool is accessible at: https://www.fairwork.gov.au/employee-entitlements/types-of-employees/shiftworkers

What is the difference between a contractor and an employee, and why is this important?

The Standard Employment Contract template is appropriate for use with employees only. If you require an independent contractor template, you should obtain independent legal advice.

It is important to identify at the outset whether an employment relationship exists between the parties, because the relationship gives rise to a number of rights and obligations for an employer.

An issue can arise where an employer seeks to characterise a relationship as a contractor relationship in circumstances where in practice, it is akin to an employment relationship. In such a case, the employer is exposed to a claim by the purported contractor for employee entitlements including accrued leave.

While there are a number of defining characteristics of the employment relationship, the courts have identified that the appropriate test for determining whether an employment relationship exists is to look at the totality of the relationship - known as the "multi-factor" test.

The courts may be required to identify whether a person is a contractor or employee if a dispute arises about potential entitlements such as annual leave or the payment of income tax or superannuation.

The classification of an individual as either an employee or contractor will affect tax and super obligations payable in respect of an individual. Penalties and fines may apply to an employer who fails to comply with these obligations. If you are unsure about whether an individual engaged by your organisation is an employee or contractor, you should seek independent legal advice.

In addition, there are a number of online tools available to assist with the determination of the status of an individual as a contractor or employee. The Fair Work Ombudsman Independent Contractors and employees fact sheet provide general information. The fact sheet is accessible at https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/rights-and-obligations/independent-contractors-and-employees.

Click here to check more details about employee or contractors provided by ATO.

Set out in the table below is a summary of some of the key characteristics that a court will consider when determining whether a relationship is an employment relationship or a contractor relationship. Please note that the examples set out in the table should be used as a guide only and are not exhaustive. You should seek independent legal advice if you require assistance with identifying the appropriate classification of an individual within your organisation.

Employee vs. Contractor
Employee vs. Contractor
Principal pays a salary or wage to the employee Contractor renders an invoice before a fee is paid and the Principal pays the contractor a fee
Principal deducts PAYG tax Contractor charges GST on top of fees
Employee is entitled to paid leave Contractor is not entitled to paid leave
Employee is provided with equipment and facilities necessary for the work Contractor usually provides their own staff, equipment and facilities to perform the work
Employer determines hours and place of work Contractor usually sets their own hours and place of work
Employer pays for all expenses incurred in performing the work Contractor takes out their own insurance.
Employer has the right to require work to be performed exclusively for the employer Contractor is not required to work exclusively for the Principal
Contract is for the provision of personal service The engagement is for a specific project or to produce a particular result and the Contractor can be paid a lump sum or hourly rate referrable to the task or project

Sham contracting and misrepresentation under the FW Act

Under the FW Act an employer must not misrepresent to an individual that the contract under which he or she is employed is an independent contracting arrangement, where the person is actually an employee. This is commonly referred to as 'sham contracting' and there are civil penalties for sham contracting arrangements under the FW Act.

How do I determine the appropriate wage rate for employees covered by the Standard Employment Contract?

You should seek independent legal advice regarding minimum rates of pay due to your employees, including in respect of modern award or enterprise agreement coverage of your employees.

You may wish to consult the Fair Work Ombudsman's Modern Award Fact Sheet and Award Finder Tool.

The Fair Work Commissions PACT Pay Calculator can also be used to calculate pay rates, base pay rates, allowances and penalty rates (including overtime). The tool is accessible at https://calculate.fairwork.gov.au/findyouraward.

How do I calculate an employee's leave entitlements?

You should seek independent legal advice regarding the correct calculation of leave entitlements for your employees, including under applicable industrial instruments.

You can consult the Fair Work Ombudsman's Modern Award Fact Sheet and Award Finder Tool.

The FWO leave calculator tool is accessible at: https://calculate.fairwork.gov.au/Leave

The Fair Work Commissions PACT Leave Calculator can assist to calculate leave entitlements such as annual leave, annual leaving loading, sick and carers leave accumulated under the relevant award of the NES, however:

  • if your employees are covered by an enterprise agreement, and are entitled to more generous leave entitlements than under the NES, you should not use the PACT Leave calculator.

As at 30 September 2019, the method of accruing and taking of personal/carer's leave for the purposes of the NES, is the subject of litigation in the superior courts.

You should seek independent legal advice if you have any queries regarding the correct calculation of leave entitlements for your employees.

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