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Employment Agreement Essentials

Understand the key elements of employment contracts in Australia

Types of employment agreements

Permanent employment refers to a situation where an employee has an ongoing position with regular working hours and no specified end date. This type of employment can be either full-time or part-time.

Full-Time Employment

Full-time employees typically work 38 hours per week and are entitled to paid leave entitlements, notice periods, and redundancy pay if the position is made redundant.

Part-Time Employment

Part-time employees work less than 38 hours a week on a regular and predictable basis. They also receive benefits on a pro-rata basis compared to full-time employees.

Casual Employment

Casual employment is characterized by no guaranteed hours of work on a regular basis. Casual employees don't receive paid leave entitlements but do receive a higher hourly rate (casual loading) to compensate. Employers don't need to give notice when a casual shift is ended.

Fixed-Term Contract Employment

This type of employment is for a specific period of time or to complete a specific task. The contract states the length of employment. Notice periods apply and redundancy pay may be required. There are two main types of fixed-term contracts:

  • Fixed Term: There's a specified end date.
  • Maximum Term: No specified end date, but maximum duration set, after which, the position becomes permanent.


Awards are legal documents that outline the minimum pay rates and employment conditions for specific industries or occupations. They operate in conjunction with other employment agreements and the National Employment Standards.

Enterprise Agreements

Enterprise agreements are collective agreements negotiated between an employer and a group of employees, providing terms and conditions of employment. These conditions must be better than the minimum requirements set in an applicable Award.

Independent Contractors

Independent contractors are not employees. They are self-employed and run their own business, contracting with other businesses to provide services. They control their own work, and do not receive the same entitlements and protections as employees.

Essential clauses

Identity of the Parties

Employer and employee details include full legal names and addresses.

Commencement Date and Type of Employment

The agreement should specify the official start date and type of employment, such as permanent (full-time or part-time), fixed-term, casual, or other.

Position and Responsibilities

The job title, duties, responsibilities, and reporting line should be clearly defined.


The agreement should detail the base salary, superannuation, allowances, overtime rates, and performance bonuses. Superannuation must meet minimum 10.5% superannuation guarantee requirements.

Hours of Work

Ordinary and rostered hours of work should be specified.

Leave Entitlements

Leave entitlements should be in line with the National Employment Standards (NES) and applicable Awards. These include annual leave, personal/carer's leave, and other types of leave such as compassionate and long service leave.

Intellectual Property

The agreement should state that any work-related Intellectual Property created by the employee belongs to the employer. The employee should formally assign all rights in created IP to the employer.


The agreement should specify the required notice periods for both employer and employee in the event of termination. It should also define circumstances under which the employment can be terminated immediately without notice.

Restraint of Trade

Any restrictions on the employee working for competitors, soliciting clients, etc. after the employment ends should be defined. These clauses must be reasonable to be enforceable.

Dispute Resolution

The agreement should outline the process for addressing disputes or grievances internally before external legal processes.

Governing Law

The agreement should specify which state or territory's laws will apply.

All clauses must comply with the Fair Work Act 2009, National Employment Standards, and any relevant Awards or Enterprise Agreements.

Probationary period

A probationary period is a trial timeframe at the start of a new job. It allows both the employer and employee to assess the suitability of the working relationship. While Australian employment law doesn't specifically define them, they're common practice.

Key Aspects of Probationary Periods in Australia

The core purpose of the probation period is to evaluate the employee's skills, performance, and overall fit for the company's culture and work requirements. It also allows the employee to determine if the role and company align with their expectations and career goals.

Probation periods in Australia generally last between 3-6 months, though extensions up to 12 months may apply to senior positions. The exact duration should be outlined in the employment contract.

During the probationary period, both the employer and employee usually have the right to terminate employment with shorter notice periods than would apply after that period. Specific terms are found in the employment contract.

The Fair Work Act 2009 does not explicitly cover probation but provides a framework for employment standards and the right to protection from unfair dismissal.

Best Practices During a Probationary Period

For Employers

Employers should define job duties and performance standards at the outset. They should provide constructive feedback to the employee throughout the period and keep records of assessments and feedback conversations. Evaluations should be based on job-related criteria, avoiding bias.

For Employees

Employees should demonstrate initiative and a willingness to learn. They should seek clarification on job expectations or company procedures, actively listen to and address feedback, and consider whether the position and company are a good match.

Importance of the Employment Contract

The probationary period must be clearly defined in the employment contract, including the duration, performance expectations, termination procedures, and any variations in employment conditions.

Confidentiality and non compete clauses

Confidentiality clauses are designed to protect an employer's sensitive and proprietary information, such as trade secrets, business plans, customer lists, or financial data. Employees are generally expected to maintain the confidentiality of information gained during their employment, even after termination. However, there are limits to what information can be legitimately protected. Common examples of protected information include trade secrets, client information, intellectual property, and sensitive business strategies.

Non-compete clauses restrict an employee's ability to work for a competitor, set up a competing business, or solicit clients or former colleagues for a defined period after termination of employment. In Australia, courts approach non-compete clauses with caution. To be enforceable, a non-compete clause must protect a legitimate business interest, such as trade secrets, confidential information, or key client relationships. Additionally, restrictions on time, geographic area, and the scope of activities prohibited must be no wider than reasonably necessary to protect the employer's interests.

Key Considerations for Employers

Employers should draft confidentiality and non-compete clauses specific to the role and the legitimate business interests being protected. Overly broad restrictions should be avoided. Clauses should be updated periodically to reflect changes in the business and the employee's role. Employers should provide additional compensation or benefits to employees in exchange for signing agreements with restrictive clauses. It's also advisable to consult with an employment lawyer when drafting or enforcing confidentiality and non-compete clauses to ensure they're reasonable and legally sound.

Important Note for Employees

Employees should thoroughly examine confidentiality and non-compete clauses in any employment contract before signing. If possible, attempt to negotiate narrower or less restrictive terms. Be aware of how these clauses could impact your future employment opportunities.

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