Employment contract tips for employees

Receiving a new job offer is an exciting moment. Before you pop the champagne and announce your news, there's one crucial step: reviewing your employment contract. This legal document is the blueprint for your working relationship, outlining your duties, rights, and what you’ll be paid. But the fine print can be tricky.

This guide provides practical employment contract tips to help you understand what you're signing. Armed with the right advice, you can ensure your contract is fair and sets you up for a successful future.

What are employment contracts?

An employment contract is a legally binding agreement between an employer and employee that details the terms and conditions of employment. While every contract is different, it sits within a wider framework of Australian employment law.

The foundation of all employment in Australia is the National Employment Standards (NES). These are 11 minimum entitlements that must be provided to every employee. They cover areas like maximum weekly working hours, superannuation, requests for flexible working arrangements, and various types of leave entitlements.

On top of the NES, your job may be covered by a modern award or an enterprise agreement.

Awards set out minimum pay rates and conditions for a specific industry or occupation.
An enterprise agreement is negotiated between an employer and employees and sets out the terms for a particular business.

Did you know? A key point to remember is that a written contract cannot provide for less than your minimum legal entitlements under the NES or a relevant award. Your contract can offer more generous provisions, but it can never undercut your basic rights.

Types of employment contracts in Australia

Understanding the type of employment you are being offered is critical, as it affects your rights, pay, and job security. Here are the main types you'll encounter in Australia.

Permanent full-time: You work a set number of ordinary hours each week (usually 38) and are entitled to all NES benefits, including paid annual and personal leave.
Permanent part-time: You work fewer than 38 hours per week on a regular basis. You receive the same entitlements as a full-time employee, calculated on a pro-rata basis.
Casual: You are employed on an as-needed basis without a firm advance commitment to ongoing work. You are paid a higher hourly rate (a "casual loading") to compensate for not receiving benefits like paid annual or sick leave.
Fixed-term: You are employed for a specific period, a particular season, or to complete a defined task. As of December 2023, new rules limit fixed-term contracts to a maximum of two years.

It's also important to distinguish between an employee and an independent contractor. A contractor runs their own business and is hired to provide a service. They are not entitled to employee benefits.

Did you know? "Sham contracting" is where an employer misrepresents an employment relationship as a contracting arrangement to avoid paying legal entitlements. If your potential employer suggests this, it's a major red flag.

Employment contract checklist

Before signing, it’s vital to fully understand every part of the document. A thorough review will build a strong foundation for your new professional relationship. Here’s a checklist of key clauses to scrutinise.

Position and duties: Does the job title and description of your duties match what was discussed? Ensure it accurately reflects the role you expect to perform.
Remuneration: Check that the salary package is clearly stated. Does it include superannuation, or is super paid on top of the base salary?
Allowances and benefits: Are there provisions for bonuses, health insurance, a car allowance, or other benefits? Ensure these details are documented.
Hours of work: The contract should specify your ordinary working hours and any reasonable requirements for additional hours.
Superannuation: The minimum super guarantee is set by law, but confirm that your employer will be contributing the correct amount.
Leave entitlements: Review the provisions for annual, personal, and long service leave to ensure they meet the NES minimums. Check if your contract includes parental leave above the minimum NES entitlements, such as paid leave, super during unpaid leave, or flexible return options.
Probation period: A probation period is common in a new employment contract. Check its length, which is typically between three to six months.
Termination and notice periods: What are the notice periods required from both you and your employer to end the employment?
Confidentiality and Intellectual Property (IP): Most contracts include clauses that protect the business’s confidential information and state that any intellectual property you create during your employment belongs to the company.
Restraint of trade clause: This clause might restrict you from working for a competitor or starting a similar business for a set time after you leave. These must be reasonable to be enforceable by a court, but it's wise to seek legal advice if you are concerned.

How to negotiate your employment contract

Many people don't realise that key terms in an employment contract can be negotiated. Contract negotiations are a normal part of the process for a new job. Your potential employer expects you to review the offer carefully, and a thoughtful, professional approach to negotiation can demonstrate your value.

Key areas for negotiation often include:

Salary and remuneration: This is the most common point of negotiation. Before you start, research the market rate for your role, sector, and location. Resources like the Hays Salary Guide provide invaluable guidance on industry standards.
Job scope and title: If the duties listed are broader than you expected, you might negotiate a more senior title or a higher salary to reflect the increased responsibility.
Flexibility: Flexible working arrangements are increasingly important. Looking to maintain hybrid options? You might negotiate for hybrid work options, flexible start/finish times, or a compressed work week.

Here’s a simple script to start the conversation:

"Thank you so much for the offer. I'm very excited about the opportunity to join the team. I’ve had a chance to review the contract, and I'd like to discuss the salary package. Based on my research into similar roles and my experience in [mention a key skill], I was hoping for a salary closer to [your desired figure]. Is there any flexibility on this?"

Top tip: When discussing salary expectations, be prepared to explain your reasoning calmly and professionally. If the employer can't move on salary, consider other trade-offs. For example, you could ask for an extra week of annual leave or a professional development budget. The goal is to reach a mutually beneficial agreement.

Can an employer change a signed contract?

Once signed, an employment contract is a legally binding document for both parties. Your employer cannot change the terms of your agreement without mutual consent, such as reducing your hours or changing your work location, without your consent.

For any significant changes to occur, your employer must consult with you and obtain your genuine agreement. This process typically involves proposing a formal "variation" to the contract, which you must review and sign.

Did you know? If your employer attempts to enforce a change without your consent, this could constitute a breach of contract or even constructive dismissal. In such circumstances, you should consider seeking legal advice.

2023–2025 law changes that may affect your offer

Several recent and upcoming changes may affect your offer and your rights at work.

Limits on fixed-term contracts: As of December 2023, employers generally cannot employ someone on fixed-term contracts for more than two years.
Pay secrecy banned: Clauses that prevent an employee from discussing their salary or remuneration with others are now banned. You have the right to share this information.
Casual to permanent conversion: Rules have been updated to provide a clearer pathway for long-term casual employees to become permanent if they choose.
Right to Disconnect: New laws are being rolled out that give employees the right to refuse to monitor or respond to contact from their employer outside of paid working hours, unless that refusal is unreasonable.
Non-compete reforms: The government has signalled its intention to reform non-compete clauses, which can limit your future work options. While not yet law, this is an area to watch.

Reviewing an offer? Talk to our recruiters about contract clarity and your career next steps. Contact us today.

FAQs

What should an Australian employment contract include?

A contract should clearly state:

The names of the parties
Start date
Job title and duties
Remuneration
Hours of work
Leave entitlements
Termination conditions

It should be a comprehensive record of your agreement.

Are pay secrecy clauses legal?

No. As of late 2022, pay secrecy clauses are banned in Australia. You have a right to discuss your salary and other conditions with colleagues without adverse action from your employer.

What are the new rules for fixed-term contracts?

Employers can no longer use fixed-term contracts that last more than two years, including renewals. There are some exceptions, but this change aims to improve job security.

Do I have the right to ignore emails after hours?

Yes, the new Right to Disconnect provisions generally allow you to ignore unreasonable contact outside of your paid hours. What is "reasonable" depends on the circumstances of your job and industry.

Can a contract override my award?

No. An employment contract cannot provide for terms and conditions that are less favourable than the minimum entitlements in the NES or a relevant modern award. The contract can only improve upon them.

Can my employer reduce my hours or location without consent?

No. Your employer must have your express agreement to make significant changes to fundamental aspects of your employment, such as your hours or location. Unilateral changes can be a breach of contract.