Are you a small business owner or an employee of a company in Australia? One of the most important things to ensure is that you have a contract of employment, which protects the rights and interests of both the employer and employee.

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 agreements of employment with staff.

Many people make the mistake of having a verbal commitment, and there is no proof of their employment or the remuneration and benefits that come with it. This can be a problem when and if any of the parties involved wish to change the contract provisions. This is why you should have a contract of employment. Let’s learn more about what it is and which kind of contract is best for your business.

What is a Contract of Employment?

An employment contract is a verbal or written agreement between an employer and their employees. It contains all the provisions and the job facts about the role and is drafted with the mutual understanding of both the parties involved. The contract contains the job description and all the employee’s responsibilities. Other than that, it also includes the employment details that the employer accepts.

The contract is best written clearly to avoid any problems that may arise in the future. The contract should not be vague, and things should not be left to a verbal commitment. This can help both parties as no one can go back on their word and continue the relationship on the agreed provisions.

Why Does Your Business Need a Contract of Employment?

According to the ABLA (Australian Business Lawyers & Advisors), you need to have a written contract; otherwise, if there are any problems between the two parties, it will be your word against them, which will make it hard to prove any of the provisions that were agreed on at the start of the employment.

A written contract proves that such an exchange happened, and both the parties agreed upon it. Such disputes are widespread when it comes to resignations or termination of employees. When there is no formal representation of the terms and agreement of the contract, it can be difficult for both the parties to argue and make statements as they do not have any proof to back their claims.

If the disagreement proceeds to a lawsuit, it can be difficult for both parties involved to trail each other. If there is a written agreement in place, it will be easy to answer all the questions that can help restore the disagreement.

For instance, an employment contract may include:

  • Required documents or other provisions in case of termination
  • Company policies and other procedures
  • Salary and other compensations
  • Terms and conditions
  • Job Description

Employment contracts are significant

What Are The Types Of Employment Contracts?

Now that you know the importance and use of an employment contract, you need to ensure that you get one immediately. However, it is essential that you choose the right type of employment contract that fits your requirements and business model. Here are some of the most common types of employment contracts:


This type of employment contract is for a permanent employee. Such employees are hired on either a part-time or full-time basis. Employees who work full time have to give 38 hours of work every week; on the other hand, a part-time employee will have to work less than 38 hours weekly. You can specify the work hours in the contract of employment. In Australia, permanent employees have the right to paid leaves. They are also required to serve notice of termination, among other provisions.


Casual employees do not have a contract and work for the duration of demand. These employees work only if their services are in demand by the employer. Casual employees do not have any strict commitments with their employers. They are more likely to work ad hoc, and the hours are not predetermined. Employers can mention this on the contract of employment. You can find out more about casual conversions HERE and HERE

Other than that, such employees are not eligible for benefits such as paid leaves. However, if a casual employee works consistently and for a long time with a company, they should be allowed to change their contract to a permanent employee.

Fixed Terms

The employees with a fixed-term contract agree to work with an employee over a fixed time. These employees are expected to work for regular hours and receive benefits as outlined by the National Employment Standards. Here, both parties agree on a fixed term that outlines the duration of employment. The parties involved have to agree that neither can terminate the employment before the end date.

Maximum Term

The Maximum term contract is very much similar to the fixed terms contract. However, in this contract, both parties have the right to terminate the employee whenever they want. However, it is vital to give a certain period of notice.

These were some of the most critical employment contract types. You can draft any contract you want if it works well with your business and your employees agree to it. Just be sure to include all information possible, so there are no problems in the future.

You can find out more about the contract by clicking this link HERE