Importance of Employment Agreements
With the combination of the Fair Work Act 2009 (Cth) (the Act), the National Employment Standards (NES) and the Modern Awards, it has never been more important to enter into well written agreements of employment with staff. Hoping that nothing will go wrong is no excuse. Well drafted agreements not only set out the ground rules of the relationship between employer and employee, they also limit risk for employers and provide assistance when resolving workplace disputes.
Benefits of having an Employment Agreements
- Regulating the taking of leave entitlements.
- Inclusion of enforceable non-compete, restraint of trade and non-solicitation clauses to protect an employer’s legitimate commercial interests, other employees as well as business customers.
- Inclusion of pay, overtime and benefits clauses – for Award and non-Award employees.
- Setting out performance requirements, including any applicable commission/bonus schemes.
- Requiring a minimum period of notice of resignation by staff.
- Protecting an employer’s confidential information and intellectual property.
- Assisting the recovering of overpayments to an employee in the event of termination.
When is a Agreement an Employment Agreement?
- One party has voluntarily taken on a legally enforceable duty to work
- another party has voluntarily taken on a legally enforceable obligation to pay wages in return for that work
- each party intends to be legally bound by their obligations, which are continuing and mutual, i.e the employees performance of their obligation must depend on the performance of the employers obligation
- essential terms, such as pay and the type of work to be performed, have been agreed on
Types of Employment Contracts
A permanent employee has an expectation of ongoing employment, and may be employed either;
- Full-time, i.e at least 38 hours per week; or
- Part-time, i.e less that 38 ordinary hours per week
Employed on an ongoing and full-time basis. Under the Fair Work Act 2009 (FWA), if an employee is employed full-time but there has been no agreement of their ‘ordinary hours of work’, these are usually 38 hours a week.When it comes to dismissal, these workers generally have access to the complete range of legal remedies unless explicitly stated otherwise in their award.
Part-time hours generally means fewer than 38 hours per week. As defined by modern awards, permanent part-time employees work ‘reasonably predictable’ or ‘constant’ weekly hours. When it comes to dismissal, these workers usually have access to a range of legal remedies unless explicitly stated otherwise in their award.
These employees work on an ‘as needs’ basis with an irregular pattern of work. Casual work involves employment for fewer hours than the normal full-time working week. It is normal for casuals to be paid by the hour, with no accrual of permanent employee benefits such as overtime, paid leave or payment for public holidays.
Their rate of pay incorporates a loading, currently 25 per cent, to compensate for the lack of benefits. Casuals have fewer protections when it comes to dismissal; they are not protected under unfair dismissal laws unless they have completed a minimum of 12 months service and casuals are excluded from minimum notice periods. Casual employees are typically employed from shift to shift.
From 1st October 2018 casual conversion rights and obligations will affect the majority of employers across Australia.
The new clause introduces the concept of a “regular casual employee” which is an employee that is award-covered and has a right to request to convert their employment to permanent.
But it’s important to note, not all modern awards contain this requirement so it’s best to check the award that applies to your employees.
Under most modern awards, a “regular casual employee” can request to convert their employment if they have worked:
- for a period of 12 months or more; and
- a pattern of hours on an ongoing basis, which the employee could continue to perform as a full-time employee or part-time employee (as applicable), without significant adjustment.
- The casual employee must put their request to convert in writing.
Your business must comply with the obligations contained in any casual conversion clause in a modern award, this includes:
- Providing new and existing casual employees with a copy of the casual conversion clause;
- Responding to any request to convert within 21 days;
- If you reject a request, complying with the requirements in the relevant award such as rejecting the request on ‘reasonable grounds’ or ‘not unreasonably refusing’ a request;
- If you agree to convert a casual to permanent employment, complying with the provisions of any part-time employment clause in the relevant award and providing the employee with set days, hours and patterns of work (and a new contract of employment)
It’s important to note that the new clause does not mean you have to approve all requests. It’s best to double check the relevant award but generally, the scenarios where you may refuse on reasonable grounds include but not limited to:
- The conversion would require a significant adjustment to the employee’s hours of work as a full-time or part-time employee;
- It is known, or reasonably foreseeable that the employee’s position will cease to exist within the next 12 months or the hours of work which the employee is required to perform will be significantly reduced in the next 12 months;
- The employee’s hours of work will significantly change or be reduced within the next 12 months.
Fixed-term employment means that you agree with a fixed-term employee that employment will end on a particular date
Seasonal or Piecework
Seasonal and piecework employees are paid a piece rate, i.e a rate set by reference to a quantifiable output or task (e.g shearing sheep or picking fruit) not for a period of time worked
An independent contractor is not strictly part of your business. They provide a specific service, and their contract ends when that service ends. They have no recourse to legal remedies surrounding termination but have some rights to ‘general protections” provisions in the Fair Work Act.
The contract has no provisions for paid leave or other statutory entitlements that an employer/employee relationship includes.
Be very wary of SHAM contracting. You are strongly advised to seek independent advice when looking at engaging contractors.
These workers are supplied through a labour hire agency to work for your company, generally for short periods of time. The benefit for your business is that you are not the employer and therefore not obligated for the usual range of employee benefits.
Each employment relationship carries different obligations and different rights. It is critical to understand these differences and hire the right type of worker.