Employment contract is at a core of every country’s labour laws and it governs the rights and responsibilities between employers and their workers and even the independent contractors. In general, in addition to individual employment contracts, most employees are covered by collective certified agreements or some awards. In legal terms, employees are bound by their contract of service or contract of employment whereas an independent contractor is tied to his so called contract for services. Casual employment contracts are also covered by awards in most cases.
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On the other hand, independent contractors are generally not covered by statutory minimum awards or similar workplace agreements such as so called Workplace Agreements and more recently introduced National Employment Standards. Building industry and construction contracts as well as the transportation industry are the areas where contracts for service are extensively used.
Basic structure of every employment contract is its terms and conditions. In addition to these contracts, letters of offer and appointment, awards, job description and related laws such is common law will form the overall terms of anyone’s terms of employment. These terms that are not necessarily written into every employment contract imply certain rights and responsibilities. A good example for this is the obligation of all employees and contractors to keep companies trade secrets confidential as well as to exercise a reasonable amount of skill and care while performing their job duties.
A very important fact worth pointing out is that every employment contract must at least comply if not exceed the basic 10 worker’s entitlements as stated in the Australian National Employment Standards (NES) guide. These ten entitlements can be found on Fair Work Australia website.
Breach of employment contract
What happens when the employment contract is breached by either party? As with any other contract, being a legal document agreed upon by two or more parties, breach of employment contract in most cases leads to either party suing the other. The law suit would be seeking damages for breach of the employment contract. Most common sources of conflict are breach of statutory agreements where employees take strike and other industrial actions. Another one is where an employee sues the employer for underpayment of wages or unfair dismissal.
As an employer, your legally binding employment contract with your employees must contain conditions of employment section as well as include the contract commencement date and the end date if applicable. Other basic elements such as termination notice periods and severance entitlements should also be an essential part of this legal document.
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