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
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
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.
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.
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.
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.
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
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).
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.
• 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
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.