Reviewing the fundamental elements of your employment contract

The foundation of any employment relationship is the employee’s contract of employment. Whilst existing in conjunction with the companies own policies and guidelines, an employment contract provides the fundamentals of what will hopefully become an ongoing and fruitful employment relationship, It is therefore important for all new employees to carefully review the fundamentals of any proposed employment contract with a business lawyer in Melbourne, in order to fully understand your rights and obligations under the contract.

The Position

Any employment contract should provide a prospective employee with a clear understanding of the job requirements, the hours of employment and the essential duties it entails. This should be written in straightforward language, so that you are fully aware of your expectations as an employee should you choose to enter the contractual relationship.

Understanding your obligations in fulfilling the position offered by the employee is important in regards to ‘repudiation’. In contract law this refers to unwillingness or an inability to substantially perform the contract and is grounds for termination. It is therefore important to understand the standards of performance that your prospective employer has included as terms of the contract, in order to avoid a breach of the contract which amounts to grounds for termination.

Length of Agreement

An employment contract should contain an original term of employment and specify conditions that are applicable in relation to extending or reducing the contract term. This is particularly important to review for those entering into seasonal or fixed term employment. This ensures that you are fully aware of the length of the employment, and that an extension of the term may not be a definite when entering the employment relationship.

Compensation

Adequate compensation for hard work is a fundamental of any employment relationship. If a salary has been negotiated it is important that these figures are entered into the contract, or that a base hourly wage that has been agreed upon by both parties exists within the terms of the contract. If the position involves the payment of a commission, it is important that the percentage is included and agreed upon as a term of the contract and that any overtime authorization policy that exists in the company is fair and agreeable.

Restraint of Trade and Confidentiality clauses

Restraint of trade clauses are commonly found in employment contracts and are therefore an important condition of employment which is hard to fully understand. Restraint of trade clauses regulate an employee’s conduct normally in the work area or workplace while employee is still engaged in the employment relationship and furthermore restrict a former employee’s conduct once the employment relationship has ended. This therefore also protects the employer’s business interests.

A restraint of trade clause can have lasting effects on your prospects – be it leaving your current work or then looking for other jobs, following the end of your employment relationship. It therefore is important to seek the advice of an experienced business lawyer in order to determine whether the terms are enforceable, and how they may impact you upon the end of your employment.

If a confidentiality clause exists in an employment contract it is important to understand exactly what is defined as ‘confidential information’. This will differ between companies and areas of employment, so it is important to ensure that you fully understand your obligations and the circumstances in which the disclosure of confidential information is permitted, should you choose to enter into an employment relationship.

Termination of employment

No termination of an employee’s employment will occur without a careful examination of the terms of that employee’s contract of employment. This is because the termination of employment is the end of the contractual relationship that exists between the employer and employee and therefore must comply with the terms agreed to within the contract. The elements of the contract in relation to grounds of termination are important for both parties, as they can result in claims for unfair dismissal under the Fair Work Act if a later termination of employment is a direct breach of the employment contract.

Reviewing these relevant terms in your employment contract with an experienced business lawyer is an important step in understanding your rights and entitlement for damages, should your employment later be terminated. It ensures that you enter into an employment relationship fully informed of your rights and obligations under the agreement, and will help foster a long and successful relationship with your future employer.

Bio: Laura Costello is in her third year of a Bachelor of Law/International Relations at Latrobe University. She is passionate about the law, the power of social media, and the ability to translate her knowledge of both common and complex legal topics to readers across a variety of mediums, in a way that is easy to understand.