The Employment Contract

The Employment Contract

In this lesson, you’re expected to learn about:
– the different types of employment arrangements
– the elements of a standard employment agreement

Employers offer a variety of employment arrangements and ways of paying employees (remuneration) to attract the right person for the job.

Different Types of Employment Arrangements

The different needs of organizations determine the types of employment arrangements offered to employees such as:

• Full-Time Permanent Employment
• Part-Time Permanent Employment
• Fixed Term Contract
 Casual Employment

[Optional] Negotiating Employment Agreements: Checklist Of 14 Key Issues
1) Full-Time Permanent Employment

This is the traditional method of employment for most people. Permanent full-time employees work on a regular ongoing basis every week for a set number of hours (usually 40 hours per week), and are entitled to salary, wages, and a set of employment standards and conditions.

Other features include:
• continuing contract of employment
• annual and sick leave entitlements
• superannuation* (i.e. pension)
• long service leave

* Check out this link to learn more about superannuation:
2) Part-Time Permanent Employment

Some employees may be offered part-time permanent employment, where they work for less than the ordinary full-time hours. Part-time employees have continuity of employment and similar entitlements to those of full-time employees. The difference is that their entitlements are calculated on a proportional basis.

For example, if a part-time worker is employed for three days out of five each week, he or she will be paid 60% of the full-time wage, and will accumulate annual leave, long-service leave and sick leave entitlements at 60% of the full-time rate.

3) Fixed-Term Contract

While permanent employees are employed on an ongoing basis, a business will sometimes offer employment on a fixed-term contract. Wages and conditions under these arrangements are usually similar to those of permanent employees, but the employment has a pre-arranged finishing date.

Periods of employment from 3-12 months are common with this type of arrangement, and this can suit a business that may have specific employment needs for a particular period of time.

4) Casual Contract

Also known as a Zero Hour Contract, under this contract, casual employees are employed on an hourly basis with no expectation of ongoing work.

They do not receive a range of entitlements (non-wage benefits) such as long-service leave and sick leave.

Part-time and casual employment can provide workers with flexibility that allows for improved work-life balance.

Types of Employment Arrangements
[Optional] Types of employment contracts
[Optional] Types of Employment Contracts – Fixed Term vs Indefinite Duration
Elements of a standard employment agreement
An employment contract is a legal document between an employer and employee that outlines certain aspects of the employment relationship.

Such aspects clearly define the employment terms and conditions before the employer and employee enter into a relationship. Additionally, these terms and conditions can benefit both the employer and employee.

This agreement specifies the duties and responsibilities expected of an employee. It also describes the profile of the job.

By law, an employer is required to provide employees with the terms of their employment. This document ensures that the employee knows his position in the organization and what is expected of him or her.

What will your employment contract include?

Most employment contracts are in writing – but they don’t have to be. An oral contract is just as binding but is much harder to prove.

It’s a better idea to have a written contract whenever possible, as it provides clarity and can help prevent or resolve disputes with your employer in the future.

A written contract is usually made up of a mix of two types of contractual terms:
• Express Terms
• Implied Terms

Express Terms

Express terms are elements of your contract that have been specifically mentioned, either in writing or agreed orally, by both employer and employee.

These may include:
 How much you will be paid (including overtime and bonus pay).
• Hours of work, including overtime hours.
• Holiday pay, as well as how much time you are entitled to take off (most full-time workers are entitled to 28 days and part-time workers get the same amount, in proportion to the number of days/hours they work).

Implied Terms

Implied terms are not written, but can be implied into most contracts of employment, for example that you won’t steal from your employer or that you won’t give away confidential information.

Your employer must, in turn, provide a safe working environment and shouldn’t ask you to do anything illegal, such as drive a vehicle that is uninsured.

An important element in an employment contract is this concept of mutual trust and confidence between employer and employee.

Now let’s take a look at some of the essential elements of an employment contract:

• Names and address of all parties involved
• Description of business
• Clearly defined job position and role
• Company specific requirements and/or protections
• Length of job and duration of schedule/work hours
• Pay, compensation, and benefits
• Employee classification category
• Privacy policies
• Performance requirements
• Tasks & duties
• Terms of relationship
• Termination guidelines
• Signatures and dates

Probationary Period 

The employer can choose to specify a period for which the employee will be monitored for performance.

The probationary period has a short notice period during which the employee can be asked to leave if his or her performance is not satisfactory. This also enables the employer to extend the trial period if necessary.

[Optional] What is “garden leave”?
[Optional] Sample Employment Contract
Check out this PDF to see an example of what a typical employment contract looks like:
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