FALQs to help you with Standard Employment Contracts

How does the Cleardocs Employment Contract work in a workplace in which an industrial agreement is in place?

If there is an industrial agreement (for example, an enterprise agreement or a collective agreement) in place at your workplace, then the employer must comply both:

  • with the agreement;
  • and with the terms of any contract of employment (whether the contract is written or oral).

Is the Cleardocs interface suitable if there is an industrial agreement in place?

The online interface you use when ordering a Cleardocs Standard Employment Contract takes into account that an industrial agreement may also apply in a workplace. The interface asks you whether the employee is covered by an industrial agreement and it prompts you to answer the relevant interface questions in light of that industrial agreement.

There are advantages to having both documents, and things to be careful of, see below.

Advantages: an employment contract can cover matters not included in the industrial agreement

In workplaces with an industrial agreement, it can be useful to arrange written employment contracts that deal with matters that the industrial agreement is not likely to cover — for example:

  • a requirement for the employee to protect, and not exploit, the employer's confidential information — including customer lists etc.;
  • the employee's probationary period;
  • requirements for the employee to hold a membership, qualification, or license; and
  • an agreement that the employer owns any intellectual property the employee develops as part of their employment.

The Cleardocs Standard Employment Contract deals with these matters, and many more.

The industrial instrument may also include terms specific to an industry or workplace, that are not included in the employment contract. You must still comply with those terms, even if they are not included in the employment contract.

What to be careful of

When making sure that an employee specific employment contract will work successfully for an employee covered by an industrial agreement, it is essential that the employee's contract does not undercut the employee's rights and entitlements under the industrial agreement. For example, if an industrial agreement requires the employer to give the employee a 6 week notice period for termination, then the employment contract should require that notice period to be at least 6 weeks.

If there is a difference in entitlements between the contract and the industrial agreement, then the employee will be entitled to whichever entitlement is more beneficial.

You need to be aware that if an employer replicates the terms of an industrial agreement in its answers to the interface questions, then the employer will give those terms contractual force. This means that if the employer does not comply with an obligation in the contract, then the employer will breach the contract term, as well as breaching the industrial instrument. In that case, among other things, the employee will be able:

  • to claim damages for the breach of the contract term; and
  • seek the imposition of fines on the employer; and
  • seek to recover underpayments for breach of the industrial instrument.

The Cleardocs HR Manual supports the Cleardocs Employment Contract

The Cleardocs Standard Employment Contract can be supported by the Cleardocs HR Policies and Procedures Manual — you can read about the HR Manual. The Manual is not contractually binding and can support the contract and the industrial agreement.

Definitions: consultant or employee?

Whether a person is a consultant or an employee depends on what happens in practice, and not the label the parties put on their relationship.

Anyone who engages a consultant (or contractor) needs to make sure the person is engaged as, and is treated as, a proper consultant — otherwise there is a risk that the law may treat them as an employee. In that case:

  • the "consultant" has all the normal employee rights — for example, unfair dismissal protection, entitlements to leave and so on;
  • the Agreement may be found to be a sham contracting arrangement.

If the employee's rights are breached or the Agreement is a sham contract (or both), then the Fair Work Ombudsman (or, if the Principal is in the building or construction industry, the Australian Building and Construction Commissioner) may seek to have the employee compensated, plus have penalties imposed on the Principal. Penalties of $33,000 apply for each breach of the Fair Work Act 2009 by a company.
In addition, if the so called Consultant is legally an employee, then the Principal should have:

  • made PAYG deductions from the so called "consultant's" "pay"; and
  • contributed to a superannuation fund on behalf of the employee.

If those deductions and contributions had not been made, then the Australian Tax Office could seek to recover the amounts plus interest and penalties.

The legal test

To determine whether an individual is an employee or a consultant, the law looks at the whole relationship between the consultant and the Principal/employer. The essential questions are:

  • whether the supposed consultant is in the service of the Principal/employer; or
  • whether the supposed consultant carries on a trade or business on their own behalf.

The table below sets out the types of factors that help determine whether or not the supposed consultant is an employee. There is no one single factor that determines the answer — extra weight may be given to particular factors depending on the circumstances.


Factors to consider


Whether the supposed consultant either provided an Australian Business Number (ABN) or operates through a company which is paid on invoice


Whether the supposed consultant provides skilled labour, or labour which requires special qualifications — so that it is up to supposed consultant how the job is done, so long as the contracted "result" is achieved


Whether the supposed consultant performs work for others


Whether the supposed consultant has the opportunity to generate goodwill for themselves and their business


Whether the supposed consultant maintains a separate place of work and advertises his or her services


Whether the supposed consultant can choose to perform the work offered by the employer/principal, or not


Whether the supposed consultant has the right to delegate, subcontract, substitute or employ others


Whether the employer/principal has the right to exercise control over the work the supposed consultant does


Whether the parties intended to create an employment relationship


Whether the supposed consultant is paid wages


Whether the supposed consultant is paid a contract price on invoice


Whether the supposed consultant is entitled to leave such as annual leave, long service leave, and personal leave


Whether the employer/principal has the right to suspend or dismiss the supposed consultant


Whether the employer/principal provides tools, equipment and materials


Whether the employer/rincipal provides uniforms


Whether the supposed onsultant works a set number of hours or a pattern of hours under a roster


Whether the employer/principal is responsible for workers' compensation insurance or superannuation payments for the supposed consultant *


Whether the employer/principal deduct income tax from payments to the supposed consultant


Whether the supposed consultant represented to others as part of the employer/principal's business

*Some legislation deems a supposed consultant to be a worker or employee for specific purposes — even if the parties have agreed otherwise. Examples of this include:

  • An individual may be deemed to be a worker under, and for the purposes of, workers' compensation legislation. That legislation may require a principal to take certain steps regarding workers' compensation insurance.
  • A principal may be required to make superannuation payments if the superannuation legislation deems the individual to be an employee.

In those situations, you can still use this Agreement, but the Principal will need to make workers' compensation and superannuation contributions for the Consultant. The Agreement allows the Principal to deduct the relevant amounts from the Consultant's fee.

For more information about when an individual is covered, contact:

  • your workers' compensation insurer or the workers' compensation authority in your State or Territory; or
  • the Australian Taxation Office on 13 72 26

Or, you can contact Cleardocs on 1300 307 343 to arrange advice from Maddocks Lawyers for a fee.

What is a "replacement employee"?

Replacement employees are employees who are temporarily replacing employees on parental leave.