Importance of Employment Agreements
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.
Hoping that nothing will go wrong is no excuse. 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 assistance when resolving workplace disputes.
If you are experiencing problems at your workplace and want to know casual employment rights.
Fresh HR Insights can help guide you through employment agreements and contracts.
Benefits of having an Employment Agreement
- 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.
When is an Agreement an Employment Agreement?
- One party has voluntarily taken on a legally enforceable duty to work.
- Another party has voluntarily taken on a legally enforceable obligation to pay wages in return for that work.
- Each party intends to be legally bound by their obligations, which are continuing and mutual, i.e the employees performance of their obligation must depend on the performance of the employers obligation.
- Essential terms, such as pay and the type of work to be performed, have been agreed on.
Types of Employment Contracts
A permanent employee has an expectation of ongoing employment, and may be employed either;
- Full-time, i.e at least 38 hours per week; or
- Part-time, i.e less that 38 ordinary hours per week
Employed on an ongoing and full-time basis. Under the Fair Work Act 2009 (FWA), if an employee is employed full-time but there has been no agreement of their ‘ordinary hours of work’, these are usually 38 hours a week.When it comes to dismissal, these workers generally have access to the complete range of legal remedies unless explicitly stated otherwise in their award.
Part-time hours generally means fewer than 38 hours per week. As defined by modern awards, permanent part-time employees work ‘reasonably predictable’ or ‘constant’ weekly hours. When it comes to dismissal, these workers usually have access to a range of legal remedies unless explicitly stated otherwise in their award.
A person is a casual employee if they accept an offer for a job from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work. Their rate of pay incorporates a loading, currently 25 per cent, to compensate for the lack of benefits. Casuals have fewer protections when it comes to dismissal; they are not protected under unfair dismissal laws unless they have completed a minimum of 12 months service and casuals are excluded from minimum notice periods. Casual employees are typically employed from shift to shift.
For example, if an employee is employed as casual, their roster changes each week to suit their employer’s needs, and they can refuse or swap shifts, which could mean they are casual.
Specifically, under the Fair Work Act, a person is a casual employee if:
- they are offered a job
- the offer does not include a firm advance commitment that the work will continue indefinitely with an agreed pattern of work
- they accept the offer knowing that there is no firm advance commitment and become an employee.
There are only 4 factors that determine whether an employer’s offer doesn’t include a firm advance commitment. They are:
- whether the employer can choose to offer the employee work and it’s the employee’s choice to work or not
- whether the employee will be offered work when the business needs them to work
- if the employment is described as casual
- if the employee is paid a casual loading (a higher pay rate for being a casual employee), or a specific pay rate for casual employees.
What do casual employees get?
Under the National Employment Standards (the NES), casual employees are entitled to:
- access a pathway to become a permanent employee
- 2 days unpaid carer’s leave and 2 days unpaid compassionate leave per occasion
- 5 days unpaid family and domestic violence leave (in a 12-month period)
- unpaid community service leave.
Casual employees can request flexible working arrangements and take unpaid parental leave if:
- they have been employed by their employer as a casual employee on a regular and systematic basis over at least 12 months
- they reasonably expect to continue being employed by the employer on a regular and systematic basis.
Under awards and agreements, casual employees are also paid a casual loading (a higher pay rate for being a casual employee), or a specific pay rate for being a casual employee. You can use the Fair Work Pay and Conditions Tool to find the minimum award rates for casuals. You can find registered agreements on the Fair Work Commission website .
Casuals don’t get paid days off, notice of termination, or redundancy pay, even if they work regularly for a long time. In some states and territories, long-serving casuals are eligible for long service leave.
Changing to full-time or part-time employment
A casual employee can change to full-time or part-time employment at any time if the employer and employee both agree to it.
Under the NES, casual employees have the right to access a pathway to become a permanent full-time or part-time employee, in some circumstances. This is also known as ‘casual conversion’. For more information, see Becoming a permanent employee.
Most awards also have a process for casual conversion. Some enterprise agreements and other registered agreements have similar processes. The Fair Work Commission has reviewed award clauses about casual conversion to make sure they are consistent with the NES and can assist with varying casual conversion clauses in agreements. For more information go to the Fair Work Commission website .
Fixed-term employment means that you agree with a fixed-term employee that employment will end on a particular date
Seasonal or Piecework
Seasonal and piecework employees are paid a piece rate, i.e a rate set by reference to a quantifiable output or task (e.g shearing sheep or picking fruit) not for a period of time worked
An independent contractor is not strictly part of your business. They provide a specific service, and their contract ends when that service ends. They have no recourse to legal remedies surrounding termination but have some rights to ‘general protections” provisions in the Fair Work Act.
The contract has no provisions for paid leave or other statutory entitlements that an employer/employee relationship includes.
Be very wary of SHAM contracting. You are strongly advised to seek independent advice when looking at engaging contractors.
These workers are supplied through a labour hire agency to work for your company, generally for short periods of time. The benefit for your business is that you are not the employer and therefore not obligated for the usual range of employee benefits.
Each employment relationship carries different obligations and different rights. It is critical to understand these differences and hire the right type of worker.