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Employee Contracts

Updated: Jun 27, 2023



Businesses, large and small, are encountered with the challenge of keeping track of their employee agreements.


Employee contracts are crucial documents that outline the privileges, duties and responsibilities of all employees covered by both employers and employees. These agreements set out expectations around vacation pay, hours of work, performance evaluations, bonuses and more. Keeping them organised is key to avoiding any potential legal issues.


To help you, we'll walk you through the basics of employee contracts, from comprehending the different types of standard employment contracts to contracts. Also, what to include in employee contracts, and the best practices for keeping them up-to-date. Read on to find out!


Types of Employment Contracts


Employment contracts differ by employer and situation, like any other type of employment or contract tool. However, there are different types of contracts that are typically used.


Below are the most common types of contracts used in the workplace:


Full-Time Employment Contracts


Full-time work involves a regular wage and established hours. They usually work 38 hours a week; however, this varies by sector and job. It's important to note that certain business instruments. Contracts or awards may impact their working hours and rights as an employee. One thing that always remains consistent, though, is the fact that you are entitled to paid time off. If your career ends, your employer must notify you in writing. It's all about having that job security and ease of mind understanding that you have a steady income and benefits.


Part-Time Employment Contracts


Full-time and part-time workers share the same minimum conditions and employment rights. They are eligible for benefits and entitlements despite working fewer than 38 hours a week. Part-time employees work on an ongoing basis, with typical hours each week. However, their entitlements are calculated on a pro rata basis. It indicates that their entitlements are balanced to the number of hours they work. If you're considering part-time work, you won't lose your minimum legal entitlements or any of your employee privileges.


Fixed-Term Employment Contracts


Have you ever heard of fixed-term employment contracts? When an individual is employed for a set time or project, this agreement is usually made. Once the employer and the employee's designated time period or project is finished, the contract comes to an end. Although it seems like a short solution, fixed-term employees enjoy the same advantages as permanent employees. When the contract organically ends, there's no need for notice—the job's over. If you're hiring someone for a certain project or time frame, a fixed part-time or casual-term contract may be a good idea.


Casual Employment Contracts


Casual employees, as the name suggests, work on an on-call basis as and when needed free employment contract by an employer. The major distinction between permanent and casual employees is that the latter have no employment commitment. It implies they work irregular hours and are paid by the hour. Also, they have the right to refuse shifts, and their jobs can be terminated without warning. However, to compensate for the lack of job security, casual employees are often paid an additional hourly loading. Casual employee employment may be ideal for those who want flexibility and are willing to work as needed.


Independent Contractor


As a self-reliant contractor, you run your own company. You obtain to set your rates and create your schedule, which can be incredibly empowering. Additionally, you can work for different companies. It allows you to diversify your earnings and gain more experience in different fields. However, as a business owner looking to hire contractors. It's vital to be clear on the difference between an independent contractor and a permanent employee. Hiring someone who's legally classified as an employee but treating them like a contractor can conduct in a lot of legal trouble down the line. It's all about protecting your business and ensuring that everyone concerned is on the exact page.


What To Include in an Employment Contract


As you know, the different types of employment agreements and the legalities involved. Let's take a peek at some other key points that should be included in any variety of employment contracts. Here are a few necessary items to consider:

  • Job description: List out the full job title, duties and responsibilities required.

  • Name and personal details: Include names, addresses, and references for both parties.

  • Working hours: Establish minimal working conditions and overtime requirements.

  • Pay rates: This should include salary or other hourly or weekly wage rates, as well as any bonuses or commission structures that might apply.

  • Leave entitlements: Outline the annual and other types of leave available to employees. This includes sick, personal or parental leave.

  • Non-compete clauses: This should be included if you'd like to restrict employees from working for competitors in a certain timeframe after leaving the job.

  • Termination conditions: Set out the conditions of termination, such as the notice period and any severance pay that may be due

  • Benefits: Be sure to include any additional benefits. This includes health insurance or pension contributions.


Best Practices for Keeping Track of Employee Contracts


After knowing what are the different types of employment contracts and what should be in them. It is crucial to preserve track of employee contracts. Here are some best techniques that employers should consider when keeping track of their employee contracts:


Keep an Organised Filing System


When it comes to managing employee contracts, keeping an organised filing system is crucial. You don't like to waste time digging through a chaotic mess of papers to find the right contract. That's why having separate folders for each contract is a must. But it's not just about separating them. You need to ensure everything is clearly labelled too. That way, any contract you need can be easily retrieved with a quick glance. Setting up a dependable system today will save you many difficulties later.


Document Changes and Updates


It's crucial to keep track of any changes or updates to an employer and employee who's a contract. Documenting these changes ensures that you and your employee are aware of the current terms and provisions in the agreement. It prevents misunderstandings and gives you a record to refer to. So, next time you make any adjustments to an employee's contract. Remember to take the time to document it properly. It may seem like a small detail. Yet it can make a big difference.


Make Sure All Contracts Are Signed


To make contracts legally binding, employers and employees should sign them. It is a powerful step for both parties towards a fair and smooth relationship. Employers should also keep a duplicate of the contract for reference. It's consistently good to have a backup in case of any discrepancies down the line. To avoid legal issues, don't rush the signing procedure and make sure all your contracts are signed. This will help you, as an employer, to have a sound legal standing in any future disputes.


Regularly Review Contracts


Running a business requires lots of organisation. Contract review is a critical aspect that is frequently disregarded. It may seem difficult, but updating and correcting your agreements can save you a lot of trouble. You must also get your employees' consent before changing their contracts. A little communication can help keep everyone on track and focused. For example, you can check in with your employees annually to discuss any changes or updates.


Keep Backup Copies


Have you ever considered the significance of keeping backup copies of important documents? Well, in business, this is particularly crucial when maintaining employee contracts. It's always a wise move for employers to keep a backup copy of all employee contracts in case the original gets lost or damaged. Can you imagine the headache it would cause if an employee's own employment contract ever went missing and there was no backup copy to fall back on? It would be a complete disaster, especially if that employee decided to take legal action.


Is It Possible To Adjust the Terms of an Employment Contract at Any Time?


This is a common question that employers and employees ask. The explanation is complicated and depends on several factors. Employers should not alter employment contracts without employee consent. Such as changes to salary, benefits, hours, conditions of employment, duties, or other contract provisions are included. Of course, if both parties agree to the changes by mutual agreement, then it is acceptable.


Changes can also be made if the industry has undergone a shift or if new laws necessitate them. Most businesses should advise workers of potential changes and let them decide. For example, if an employee rejects the changes, they may have the privilege to terminate the contract and claim damages.


If an employment contract contains implied legal provisions or industry-specific codes of practice, employers may need employee consent to amend it. Then the employers cannot generally override those terms by changing the contract.


Talk to a HR consultant


Talk to one of our qualified HR consultants for more information:


Final Thoughts


Employee contracts are an essential part of any employment relationship. It helps both parties comprehend their agreement and avoid legal issues. As such, employers should grab the time to properly document and review contracts on a regular basis. Additionally, it should keep backup copies of all employee contracts in case anything goes wrong. Finally, employers shouldn't amend contracts without employee consent. With these tips in mind, employers can rest assured that their employment contracts will remain sound and up-to-date. Good luck!

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