18 additional clauses you should have in your Employment Contracts to protect your business
Even if you have a contract template which meets the minimum standards, you should consider adding additional clauses, so your employment agreements fit your business.
Think about it, you never provide the bare minimum of service and information to your clients…. so why would you only go half-way when it comes to your employment contracts?
(If you aren’t sure if you have the minimum legal requirements check out this article The 10 Minimum Clauses you MUST have in your Employment Agreements
Many employment contracts only meet minimum legal standards (if that!) or have been updated overtime without thought to the impact to the rest of the document. This results in the contract being confusing or contradictory and can lead to disputes or misunderstandings which could have easily been avoided
We have developed a robust list of recommended clauses in addition to the recommended requirements. Adding these clauses to your agreements will prevent future issues and provide greater protection for your business.
THE 18 ADDITIONAL CLAUSES YOU SHOULD HAVE IN YOUR EMPLOYMENT AGREEMENTS TO PROTECT YOUR BUSINESS
1. Trial or probation periods
If your business will employ less than twenty (20) people at the time of engaging the employee, a trial period should be implemented. Trial periods are not automatically applied and must be listed in the employment agreement. There are a number of elements which may invalidate trial periods and it pays to understand what these requirements are if an issue does arise.
If your business employs more than twenty (20) people, then implementing a probationary period may be an option. While this doesn’t provide the same protection as a trial period, it does ensure the business has clear intention to manage performance if issues do arise in the first few months of employment.
You should always be cautious and seek advice when terminating under a trial period (and especially a probationary period!) as there still may be a risk of an employment claim.
2. Company Policy and Procedure Statements.
A generic statement which indicates employees are required to adhere to your policies and procedures can provide great protection in a misconduct or performance matter. The statement should also include the flexibility of the business to review the policies in line with business operations.
3. Rest or meal breaks
Rest and meal breaks have recently been formally reinstated. While you do not need to necessarily specify exact times and duration, your employment contract templates should reference the entitlement to take rest and meal breaks.
4. Leave entitlements
Detailing the specific entitlements to leave can avoid misunderstanding and save time for HR, payroll, managers and the employees. With the recent introduction of Family Violence Leave, this is a great opportunity to introduce the entitlement and provide advice on the additional right to a Family Violence Flexible Working Arrangement.
5. Abandonment of Employment
Including an abandonment clause will protect your right to terminate or take action when an employee does not show up to work for a period of time with no contact.
6. Termination for medical reasons
Including a provision for medical termination will protect your ability to deem an employee medically unfit to perform the tasks of the role and consider termination.
7. Notice period
Notice period isn’t a minimum requirement (surprisingly!) but should be listed to provide a clear understand about the timeframe when terminating employment. You should consider the length of notice period applied and how it may impact the business if the relationship were to come to an end (by the employee’s decision, or the your own)
8. Confidentiality and Intellectual Property.
You should always protect your confidential information and intellectual property. These clauses should always be reviewed to ensure they are fit for purpose and most importantly, enforceable.
9. Conflict of Interest
Conflicts can cause serious damage to your business. Protecting against a potential conflict will reduce the likelihood of issues or disputes.
10. Serious Misconduct and Summary Dismissal.
When serious issues arise, you need the ability to act swiftly and decisively around serious misconduct issues. A well written serious misconduct and summary dismissal clause can support any action you may need to take.
A suspension clause will also protect you when there are suspicions of misconduct. An employee’s presence while investigating a serious issue can risk further damage to your business. A well-written suspension clause can provide protection when it isn’t possible to move swiftly.
12. Confirmation about right to retain representation
An employee has the right to representation or advice surrounding their employment relationships and issues. It is important to highlight this so the employee know they may bring a representative to meetings relating to their performance or role. You may also govern the protocols surrounding representation (such as notice or appropriate parties).
13. Health and Safety
The Health and Safety at Work Act requires a commitment by all parties to safety and responsibilities. Highlighting these requirements show an act of commitment as well as educating the employee on their obligations under the Act.
Detailing the provisions for an employee should their employment terminate due to redundancy can greatly reduce disputes or uncertainty if the situation does eventuate.
15. Restraint of Trade and Non-Solicitation
Controlling who and when your employee can work for a competitor, potentially share information, approach exisiting clients or poach staff is extremely important protection for your business. It is important to note that Restraint of Trade clauses may not be enforceable unless drafted and applied correctly.
16. Public Holidays
In addition to the minimum payment clause, if you do expect an employee to work public holidays (even just on occasion), these expectations should be clearly stated. Employees may refuse to work the public holidays if this hasn’t been detailed as a specific requirement of their employment.
17. Annual Shutdown/Closedown Period
While your business may continue to operate over holiday periods, it is good practice to allow the ability to enforce a shutdown period (whether over Christmas or another nominated period). You may use this period during quiet times (if it is consistent). This clause doesn’t prevent you to still maintain partial operations, or ‘skeleton’ staff. A shutdown period is also a great way to manage leave liability within the business.
18. Ability to cancel shifts or work
Your business needs may change and the ability to cancel shifts and work is paramount to an efficient operation. Disputes can occur when cancellations are not reasonable or practical. You need to set clear guidelines as to how this may occur within your contracts.
Our recommended clauses are aimed at providing you with greater protection. You may also find you need customised clauses for your specific business operations, such as how you manage use of company equipment, working hours or shift provisions, allowances, overtime payments, required licenses, additional benefits, commissions or bonuses…the list goes on!
Even if a clause doesn’t seem to apply to you (or you doubt you will ever enforce a requirement), it doesn’t hurt to have the clause included. It will hurt if you find you need it in the future and don’t have it. Protecting your business is important! Just because a clause has been included to protect your business does not mean you have to enforce it when you would like to provide flexibility.
Also remember a Policy can provide further clarity on processes and your stance on certain topics. Although these are non-contractual terms, they provide firm guidelines as to how your business operates, with the benefit of having the ability to amend or change as your business needs. It is important to remember the Policy is always trumped by the employment contract (and the employment contract is always trumped by legislation).
Mostly, you need to consider the operations of your business when drafting employment agreement. Often generic agreements do not account for industry or role specific requirements or the on-going (and future) needs of the business. It can be problematic to amend or add additional contractual clauses at a later stage, so it is important to ensure your employment contracts are fit for purpose and right first time!
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