Current employment contracts – is it really that important?

By: Natasha Hawker

To have a contract or not - that is the question! Can you rely upon a handshake? I have found when dealing with SMEs that it is very common for the new business to grow quickly and an employment contract is pulled together hastily in order to bring on new employees. Most business owners borrow a mate’s employment contract to get something to use.  What often happens then is that various managers amend them (unbeknownst to the owner) and they end up with numerous versions, or in some instances no contract whatsoever, for their longest serving employees.

Why is this problematic then? Here are the top five reasons why you need to get your housekeeping in order:

Sets the scene - when someone is considering joining your organisation, one of the first impressions that they receive is the employment contract. This begins to set the tone for what they can expect life to be like as an employee of your company and what is important to the business. This can assist you in attracting the ‘right’ kind of employee

Consistency – imagine Jeff in accounts has negotiated into his contract an additional week of annual leave; first, this is a concession that has been agreed to and second, you immediately have an equity issue – do you reduce Jeff’s allowance back to four weeks or up everyone’s to five weeks? It is important to ensure that everyone is treated the same, especially as you grow

Not compliant with FWA changes – The Fair Work ACT came into effect 1^st January 2010 and with it comes a number of minimum standards which all employees across Australia are entitled to. Do you know what these are?  If not, you are in potentially in breach of the FWA and you should correct this immediately

Uncertainty of rights & expectations - To save any confusion everyone should be very clear about their rights - both employer and their employees and this generally reduces potential conflict

What happens when someone leaves? - It is a business reality that people will leave your organisation and when they do, are you protected against them taking with them client information, intellectual property or poaching your employees?  Unless this is in the contract it is ‘poor form’ but perfectly legal

A couple of other points to note, you are legally required under the FWA Act to supply any new employees with the Fair Work Information Statement when they join.  If you don’t you are breaching the Act.

I would also recommend that you regularly review and potentially amend your employment contract every 2-3 years and especially if there are changes in legislation. Remember the employment contract sets the framework for the way that you employ people and it protects your business in the long term. It shows that your employees matter to you!

Are your employment contracts current and do they protect you? It would be great to get your feedback.

Natasha Hawker owns Employee Matters Pty Ltd; an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them at www.employeematters.com.au