Join our JFM Law team as we answer your FAQs about Employment Contracts.
Transcript
What is a casual employment contract?
A casual employment contract is a contract between an employer and someone who is going to be working for them on, effectively, a shift-by-shift basis. So, someone who will usually be rostered for a particular job role and that rostering might vary from week to week depending on their availability and the amount and type of work that the employer has for them.
What are the benefits of a casual employment contract?
There’s quite a few benefits to being on a casual contract. I think it really depends on your lifestyle as well. I think casual employment really benefits a lot of people who don’t want that rigid structure. They might be a student, they might travel a lot, they might just want shifts that suit them. They get the ability to knock them back, but they also usually get a loading amount paid on their minimum wage amount. So, they get a little bit more. This compensates because they don’t get things such as annual leave, sick leave, things like that.
What is a full time employment contract?
A full time employment contract is a contract between an employer and someone who’s going to be a permanent employee in their organisation. Now, ‘permanent employee’ doesn’t mean they have to work there forever, it just means that they’re entitled to the ongoing expectation of that employment unless something else happens in the employment relationship and there is a resignation or termination under the law. That permanent employment contract tends to be more detailed than a casual contract, and it will include provisions around the rate of pay, which will either be a salary remuneration or still might be calculated on an hourly rate basis. It will specify where they work the hours that they’re expected to work, which for a permanent full time would usually be 38 hours a week. But permanent employees can also be part time. And so, if you’re going to be part time, you can expect to work the same regular part time hours each week and they should be specified in a contract. Permanent contracts may also include additional terms around added incentives, such as bonus packages or other benefits, and may also contain post-employment restraints.
What is a part time employment contract?
Part time employment is a permanent position with an employer. And it’s an agreement between the employer and the employee and it’s where they work part time. So instead of working full time hours, which is typically between 38 and maybe to 42 hours, they will work part time and that can really be anywhere from as little as three hours a week to full time. So, it’s great for people who want permanence and they want an ongoing, permanent roster, but they can’t commit to full time work. But they also don’t want to be a casual and never have guaranteed work.
Permanent employees whether you’re full time or part time, all accrue leave entitlements. So, there’s several different leave entitlements that are provided for under the Fair Work Act, but the main ones are personal leave, which is often referred to as sick leave, which is where someone is entitled to be paid if they’re unwell and unable to come to work for a certain amount of days in a year. Typically, under the Fair Work Act that is 20 days. But some awards can provide for more. So can enterprise agreements and particular employment contracts. So, employees should always be aware how many leave days they’re entitled to. The other type of leave that employees can access is annual leave, which again can vary depending on the industry and the contract terms. But it’s typically four weeks of annual leave under the Fair Work Act, and that is accrued on a pro rata basis. So, for a permanent employee who’s full time, they’re entitled to the full 4 weeks. For a part time, they’re entitled to four weeks, but based on their part time hours.
What is a fixed term or maximum term employment contract?
A fixed term contract is an agreement between an employer and an employee and you’re employed for a fixed term. So, this could be six months, or even a year. It shouldn’t be longer than two years. And the reason for this is it’s quite common we see in trade industries and places where there’s a project. So, they want someone to be employed for just that specific amount of time to do that one or two things and then they’re not needed after. So that’s usually what a fixed term contract is.
Maximum term contract really similar except it’s as it sounds, for the maximum term and that might be because there might be a project and they don’t know how long it’s gonna go for. So, they might just say, “well look, it’s gonna be about 12 months, so it’ll be a maximum 12 month contract.” But there’ll be termination rights usually going both ways, potentially in the middle there somewhere.
An employee who’s employed on a fixed or maximum term contract basis still has the same entitlements that are permanent employees is entitled to. So, during that term that they’re employed for, they still accrue annual leave and personal leave and can still take that leave during that term. I suppose the only difference from a leave basis is that a fixed term or maximum term employee would generally not expect to be accruing long service leave because the nature of the engagement is it really has an expiry date.
How have recent changes to the Fair Work Act impacted pay secrecy clauses in employment contracts?
Pay secrecy clauses in employment contracts are no longer permitted due to the recent changes in the Fair Work Act. That means that employers cannot require their employees to keep their pay confidential from, say, their colleagues. That may have quite serious impact among industries, and we expect to see some types of discrimination claims coming out of that as a result of employees starting to talk among themselves about the rates of pay that they are all receiving.
Why is it important to seek legal advice when drafting an employment contract?
It’s important to seek legal advice when drafting an employment contract because we see so many contracts go wrong.
An employer needs to cover all the important key commercial terms of the employment arrangement, which might include things that can be a bit tricky, like bonuses and whether those bonuses should be discretionary or whether they are a fixed part of the remuneration package.
Post employment or restraints are another key aspect of employment contracts that are really difficult, and we see a lot of employers get them wrong. It’s important to consider what restraints you would ideally like and then also give some consideration to what may be reasonable considering the employee’s role, their level of experience, and their length of tenure within your organisation, because there really isn’t a one-size-fits-all approach when it comes to post employment restraints.
What is the process for changing rosters or ordinary hours of work for permanent employees?
Ultimately, it depends on whether that’s considered to be a significant change or an insignificant change. If it’s a significant change to the roster, such as the days or hours worked, and then you do need to consult with the employee before going ahead and changing the roster. However, if it’s an insignificant change, such as a slight variation to the start and finish times on a shift, then there’s no such consultation obligations that need to be satisfied before that change can be made.
What happens if the employee refuses the change or has a counter offer?
What’s important here is to make sure that there’s kind of an equal consideration between the parties. So, employees have lots of other things going on in their lives. So, it could be quite reasonable for an employee to reject a potential change that’d be quite major. For example, if it’s changing it to a day where they have to drop off the kids to school for an example. And what you would really want to make sure that you’re doing there as an employer is that you’re taking it into reasonable consideration and you’re really having a genuine discussion with that employee. And from an employee perspective, what you’re really wanting to look at is make sure that you’re not just rejecting it because you really like that shift that you have and you don’t want to change. Think about it and have a genuine one on one discussion with your employer about the changes that are going on.
What is an above-award rate of pay?
An above award rate of pay sort of speaks for itself. Every employment award contains a minimum rate of pay in it, and that’s a rate of pay that an employee can’t be paid less than for performing the duties that they are. An above award rate of pay is just any rate higher than that. So, while an award says I have to pay you this much and I can’t pay you any less, I can still pay you more than that if I’d like to.
What are some key considerations for employers who pay above-award rates?
Some key considerations that you’d want to keep in mind is laying it out in writing: 1) that you’re paying the above award, 2) why? Why are they getting paid above that award? And also, being aware of the fact that as a small business, it might not be something that’s sustainable in the long run to keep that above the award pay.
What are some key issues to consider when managing excessive sick leave?
The first and foremost consideration when someone is taking excessive sick leave is that an employer can’t take adverse action or take bad action against the employee for taking sick leave. That includes the employer can’t typically terminate an employee for taking sick leave unless they have been on a period of sick leave that’s longer than three months consecutively, or that they’ve been on a period of sick leave that adds up to three months over a 12 month period. So, they’re quite restrictive and you can be left in quite a tough position if your employee is on an extended period of sick leave. There’s not a lot you can do about it often.
What is a workplace policy and procedure?
So workplace policies and procedures are basically an internal guide and kind of contractual obligation for the employer to follow on how everything is run and operated. And what these policies and procedures do is basically set out how that employment abides by their requirements that are set out in the Fair Work Act and under the relevant award potentially that that employment is part of. There is legislation in Australia that governs these policies and procedures. The Fair Work Act is the first and most important legislation that’s relevant. There’s also work health and safety rules not only within the Fair Work Act, but in its own separate legislation in each state which sets out policies and procedures that employers should refer to for their employees.
What is the purpose of reviewing workplace policies and procedures?
It’s really important and I’m sure it’s something that people say all the time, but it’s important that you make sure these things are up to date and they’re in line with current standards. For example, at the moment the Fair Work Act is undergoing quite extensive changes for the first time in a while, and that’s had quite a massive change on the obligations on both employers and employees within the workplace.
To watch the rest of our Employment Law series:
The information contained in this post is current at the date of publishing – 14 June 2023.
