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Why Employment Agreements and Policies are Important

Why Employment Agreements and Policies are Important

By Wisewould Mahony
September 16, 2015

The importance of having well drafted employment contracts and policies in place cannot be understated, as these set out the framework in which the employment relationship is regulated.

Importance of Contracts

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 contracts of employment with staff.

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 probative assistance when resolving workplace disputes.

Benefits of Contracts

Benefits of well written employment contracts include:

  • 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. 

Avoiding Reasonable Notice Claims from Employees

If an employee does not have a written contract of employment, he/she may be entitled to “reasonable” notice upon termination. What a Court may deem to be “reasonable” will vary from case to case.  However, for senior or executive employees, this could be something far greater than the minimum periods set out in the Act and NES; in some cases, up to 12 months notice or salary in lieu of notice will be considered reasonable.

Why have Workplace Policies?

Up to date workplace policies benefit both employers and employees if properly implemented and managed.

In addition to establishing a basic set of rules by which to manage employees on a day to day basis, effective policies also assist employers in discharging their various legislative obligations including anti-discrimination, OH&S, bullying and unfair dismissal claims.

Common Workplace Policies include:

  • Internet, e-mail and social media policy. 
  • Occupational health and safety.
  • Bullying and harassment (including sexual harassment).
  • Equal opportunity and anti-discrimination. 
  • Drug and alcohol use.
  • Leave policy.

Incorporating Policies into Contracts puts Employers at Risk

Some employers expressly include or incorporate their workplace policies as terms of the employment contract. However, this puts an employer at risk as it may give rise to a breach of contract claim where an employer fails to abide by their own policies. In most instances, we therefore recommend that policies do not form part of the employment contract. Rather, they should be acknowledged by the employee under the employment contract as lawful directives given by the employer. If policies are effectively communicated and acknowledged in this manner, employers can still rely upon them.


Well drafted employment contracts and policies remain front and centre in the relationship between employer and employee.

Wisewould Mahony Lawyers have expertise in preparing tailored employment agreements and policies so as to protect the interest of employers, as well as minimising an employer’s exposure and liability to various claims and workplace disputes.

In appropriate cases, we can provide this service at a fixed fee.

Our Employment Services

Our Employment & Workplace Relations department can also assist you with:

  • Employment agreements and policies.
  • Enterprise agreements and bargaining.
  • Termination and redundancies.
  • Misconduct and performance management.
  • Breach of restraints and unauthorised use of confidential information & IP.
  • Discrimination, harassment and bullying.
  • Unfair dismissal and adverse action claims.
  • Employee entitlements and dealing with Fair Work Ombudsman.
  • Contractor agreements and issues.

For more information on employment contracts and policies or any other workplace matter, please contact Adam Rich.