Most growing Australian businesses start with a simple employment contract and then keep copying it. Roles change. Headcount doubles. The National Employment Standards get updated. The Modern Award that applies to the role shifts. The document on file does not keep up, and nobody notices until there is a dispute, a resignation, or a Fair Work question you cannot answer cleanly.
A clear employment contract will not fix every people issue. It does make the relationship easier to manage when things get busy, awkward, or contested.
What is an employment contract in Australia?
An employment contract is an agreement between you and your employee. It can be verbal or written; a clear written contract makes the agreed terms easier to understand and demonstrate. It sets out the role, pay, hours, leave, notice, and the main rules of the working relationship. In Australia it sits alongside the Fair Work Act, the National Employment Standards (NES), and any Modern Award or enterprise agreement that applies.
As the Fair Work Ombudsman explains, the contract cannot undercut those minimums. If a clause tries to give less than the NES or the relevant Award, that part will not hold. You can always offer more than the minimum. You cannot lawfully offer less.
What should be in an employment contract?
Every business will have some industry-specific detail. For most growing SMEs, a solid contract covers the following.
Who the parties are. Legal employer name, employee full name, and start date. If the employing entity has changed through a restructure, the contract still on file should match reality.
The role and reporting line. Job title, a clear position description or attached schedule, and who the person reports to. Vague “and other duties as required” language is fine as a catch-all. It is not a substitute for describing the actual job.
Employment type and hours. Full-time, part-time or casual. Ordinary hours, work location (including hybrid or remote if that is real), and how overtime or additional hours are treated.
Pay and benefits. Base salary or hourly rate, pay cycle, superannuation, and any allowances, bonuses or commissions. If a salary is intended to cover Award entitlements, check the applicable rules and the wording of the arrangement. Annualised wages under an Award are different from contractual salary arrangements; obligations can include reviews, records and additional payments. Use the Fair Work Ombudsman’s annualised wages and salaries guidance and obtain advice on the specific arrangement.
Leave. Annual leave, personal/carer’s leave, and other NES entitlements, plus any company extras. Casual employees need the right casual wording, not a cut-down permanent template.
Probation. Length of probation, how performance will be reviewed, and notice during that period. Probation does not remove unfair dismissal risk in every case, so treat it as a structured check-in, not a free pass.
Notice and ending employment. Notice periods that at least meet the NES, plus any garden leave, payment in lieu, or handover expectations you actually use.
Confidentiality, IP and restraints. Address client information, business know-how and ownership of work. Get specific legal advice before using post-employment restraints; their validity depends on the clause, circumstances and applicable law.
Policies. Make it clear that workplace policies apply and can be updated. Do not bury key rules only in a handbook nobody has seen.
Common gaps we see in growing businesses
These are the issues that show up again and again when contracts are reviewed properly:
- Old templates that pre-date NES or Award changes
- Casual staff on permanent-style contracts, or the reverse
- Pay clauses that do not line up with the correct Modern Award classification
- Missing or vague confidentiality and IP wording for client-facing roles
- No clear link between the contract and current workplace policies
- Restraints copied from another industry that would not survive a challenge
If two or more of those sound familiar, your contracts are due for a tidy-up, even if nobody is complaining today.
When should you review employment contracts?
You do not need a legal scare. Review when:
- The business has grown and roles look different from the titles on the paperwork
- You are hiring managers, specialists, or your first remote/hybrid roles
- Award rates or classifications have changed for your industry
- You are preparing for investment, acquisition, or a larger leadership hire
- You have had a messy exit, underpayment concern, or disputed restraint
A focused review of contracts often sits inside a broader HR Health Check, because contracts, Award coverage and policies usually need to be looked at together.
Prepare for a contract review
- Gather each contract template, role description and relevant policy.
- Note the actual duties, work locations, hours and pay arrangements for each role.
- List changes since the documents were last reviewed and questions your managers are receiving.
- Agree who will review recommendations and communicate approved changes to employees.
Frequently asked questions
Do employment contracts have to be in writing in Australia?
Verbal agreements can still create an employment relationship, but you are on much safer ground with a clear written contract signed before day one. Written terms are easier to prove and easier for managers to follow.
Can I use one template for every role?
A master template is fine as a starting point. Casual, part-time, senior and Award-covered roles usually need different schedules or clauses. One PDF for everyone is how gaps creep in.
Is a Modern Award the same as an employment contract?
No. The Award sets minimum conditions for the industry or occupation. The contract sets the specific deal with that employee. Both matter, and the contract must not undercut the Award or the NES.
How often should contracts be updated?
Whenever the role, pay structure, location or legal minimums change in a material way. As a rule of thumb, if it has been more than a couple of years since anyone checked the template against current NES and Award settings, it is time.
Get the foundations right
We can review your existing documents, explain the gaps and agree a scope for updating them. Start with your current templates and a short outline of the roles in your team.