This document discusses employment contracts and policies. It provides guidance on drafting employment contracts, including important provisions around status, wages, leave, termination and duties. It also discusses the relationship between policies and contracts, noting policies can become incorporated even if not intended. Effective policies should be clear, reasonable, communicated and applied consistently.

1. Stephen Booth, Principal and
Dominic Russell, Senior Associate
The Employment Relationship:
Getting off to a good start

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8. Stephen Booth, Principal
The Employment Relationship:
Getting off to a good start

9. Recruitment

10. Recruitment: don’ts
• avoid over-promising
• avoid promising or sort-of-
promising before you can make
a formal offer: no bets are on
till you make the formal offer
• be sure you don’t entice
someone away from a job and
then change your mind

11. Recruitment: don’ts
• avoid unnecessary questions:
How old are you?
Are you married?
Do you have kids?
Do you intend to have kids?
Where do you come from?
• these can infringe specific anti-discrimination laws or at least provide a
basis for someone to claim discrimination if they don’t get the job.

12. Recruitment: do’s
Instead, try:
• It is essential you can work these
hours. Would you have any problem
with that?
• This job involves a lot of travel. Any
problem with that?
• This job requires a lot of lifting. Any
problem with that?
• To comply with immigration rules I
need to know if you are an Australian
citizen or permanent resident, and if
not, whether you have a visa which
allows you to work for us, so I’ll need
to see your passport or other
documents to show me your
immigration status.

13. Employment Contracts:
the basics

14. LEGISLATION QUASI LEGISLATION COMMON LAW
FAIR WORK ACT MODERN AWARDS
MINIMUM STANDARDS
(General)
NATIONAL
EMPLOYMENT STANDARDS
STANDARDS
(Specific)
EMPLOYMENT
CONTRACT
BETTER OFF
OVERALL TEST
ENTERPRISE
AGREEMENT
or INDIVIDUAL
FLEXIBILITY
AGREEMENT*
*Conditions apply
WRITTEN UNWRITTEN
CAN’T
MODIFY
AWARD
CONDITIONS
CAN MODIFY
AWARD
PROVISIONS
Contracts, enterprise agreements, awards, legislation

15. Enterprise agreement, Individual Flexibility Agreement or contract?
• What are the issues you are trying to deal with?
• What would an enterprise agreement achieve as a benefit, relative
to the costs of negotiation, process and compliance?
• Would an IFA offer any advantages over a well-drafted contract?
• Would you pass the BOOT easily?

16. Employee or independent contractor?
Employee
• employed on an ongoing basis
• receives employee
entitlements
• works exclusively
• paid by periodic wage or salary
• work, hours and control by
employer
• employer responsible for tax
• unable to delegate
Contractor
• engaged on a task basis
• no entitlements
• responsible for tax
• work for anyone
• paid by task
• sets own standard and hours
• can delegate / subcontract
• may have separate place of
work/office

17. Employee status
• Always agree in advance and specify the status of employees
Permanent Employees:
• Full time employee: Weekly employee working a minimum of 38
hours per week on a continuous basis, entitled to annual leave
and personal leave
• Part-time employee: Weekly employee working less than 38
hours per week on a continuous basis, who has reasonably
predictable hours of work; and receives pro rata pay and
conditions of a full-time employee who does the same kind of
work:
should agree standard hours in writing

18. Employee status
Casual Employees:
• are engaged to perform work on an intermittent or irregular basis or to
work uncertain hours, without entitlement to annual or personal leave
• receive loadings - generally 25% - 30%
• caution where employee is working on a regular and systematic basis
• but an award employee “engaged and paid as such”?
• some provisions in law deal with casuals of long standing: status
recognised for some purposes, may be treated as permanent for others
• casual conversion provisions

19. Ongoing or fixed term
• contract period can be ongoing, with a notice period and termination
provisions: usual for employees.
• a “true” fixed term contract operates for a pre-determined period
(eg. 12 months), and the contract ends at the completion of period:
early termination = pay out the rest of the contract
• some “fixed term” contracts have notice provisions and are not true
fixed term contracts: terminable or notice

20. What type of relationship is this?
• employees go from wages to profit share arrangements and company
thereafter views them as partners
• nothing in writing
• company stops recording leave accrued and taken and
[employees/partners] cease applying for leave and make own
arrangements
• paid $X per week, with monthly profit distributions, or deductions in case
of a loss
• company pays tax and super

21. What type of relationship is this?
• bus drivers classed as casuals, paid
loading accordingly
• some have worked for a long time
• rosters for shifts morning and
afternoon in peak times only,
rosters change but not frequently

22. Content of Employment Contracts

23. Employment contracts
• no legal requirement to have a written agreement –
but it is good practice and reduces risk of uncertainty
• In order of precedence, the employment relationship is governed by:
-legislation
-any applicable awards or enterprise agreements
-a contract of employment.

24. Employment contracts
• The contract may include:
-express written or verbal terms
-implied terms
-terms incorporated from policies and collateral agreements
-common practice or industry convention
• get the signed contract before they start

25. Statutory framework
State Federal
Minimum wages
Long service leave
Annual/personal leave
Parental leave
Redundancy
Superannuation
WHS
Workers compensation
Discrimination

26. Important provisions
• status: full-time, part-time, casual etc
• relevant award and classification
• job description
• capacity to work for you: no disabilities or
injuries, issues with immigration status,
or restraints from prior employment
• wages or salary & benefits
• probation
• if applicable, intellectual property,
restraint and non-solicitation clauses
(all require care)
• termination and notice
• duties, standards, review

27. Salary & Benefits
• base salary (reduced to hourly rate where appropriate), and whether
inclusive of super
• car, phone, laptop: what is a tool of trade and what is remuneration?
• relationship to any applicable award and overtime, penalties,
allowances or other loadings (annualised salary or offset clause)?
• bonus provisions – discretionary or formula? - in policies or other
document if subject to change?
• voluntary super contributions and salary sacrifice arrangements – for
the benefit of employee and recorded in writing

28. Probation
• distinction between probation and
“qualifying period” for unfair dismissal
• probation can only be as long as
reasonable
• standard 3-6 months, perhaps longer
for senior employees
• don’t bind yourself to giving reasons
or review during probation

29. Leave
• setting out the rules, at least broadly,
avoids constant questions
• cover some of the detail important to you
• is a medical certificate necessary for 1 day?
• who do you call if you are away sick, and by
when?
• cashing out of annual leave for non-award
employees
• how much notice do you need before leave
is taken?
• do you have an annual closedown or rules
about taking of accrued leave?

30. Notice & Termination
• fixed term – true fixed term contract can only be terminated as a
result of repudiation (serious misconduct) or frustration
• right to pay in lieu (usually employer only)
• “garden leave”
• suspension
• notice (minimum scale of 1 – 5 weeks – longer period if agreed)
• what benefits form part of notice?
• any procedures for investigation or performance management should
be flexible and not too prescriptive

31. Duties/Position Description
• part of contract or attachment?
• important to set base requirements
for performance management
• include provisions providing for
variation of duties, change of location,
change of reporting lines to avoid
these things resulting in “constructive
dismissal”

32. Executive Content
Additional provisions that should be considered for valuable and senior
level employees include:
• non-competition and non-solicitation: what interests do you need to
protect, what is the minimum period you can live with?
• exclusivity and conflict: working in other businesses or holding shares
• incentive/retention clauses
• level of authority
• intellectual property: who owns ideas developed at, or away from, work?
• confidentiality: what is confidential?
• longer notice period – interaction with statutory redundancy entitlements?
• listed entity: capping of termination benefits under the Corps Act

33. Restraint clauses
• legal starting point: assumed to be unenforceable
• Enforceability and reasonableness: necessary to protect a legitimate business
interest and not against public policy
• very strict rules on interpretation: correct entity? severable terms?
• scope: duration and geographic operation? - restraint term must ‘only go as
far as is reasonably necessary’
• restraints on poaching clients and employees easier to enforce than
prohibitions on competition – bare non-compete is invalid
• will it stop the employee earning an income?
• reasonableness test applied against circumstances that existed at the time
the contract was formed, not when it was terminated
• must be clear understanding that salary covers agreement to be bound

34. Changes to the contract
• variations occur by incremental changes over
time and are often not documented
• as a result, the employment contract may
become obsolete and cease to operate:
particularly important for notice periods and
restraint clauses
• variations should be in writing: confirm
changes and reaffirm the rest of the existing
contract
• does the contract contemplate change?
Promotion, change of employing entity,
or other significant change in job requires
new agreement

35. Dominic Russell, Senior Associate
The Employment Relationship:
Getting off to a good start

36. Policy and Procedure Content

37. Policies and contracts
• policies are written rules, guidelines and aspirational goals for the
workplace – common policies include:
– redundancy
– performance management
– work health safety
– social media/IT
– bonus schemes
– workplace behavior
• may be referred to generally in the contract, but large amounts of
information are better placed in policies
• policies may evolve and change from time to time without changes to
the contract

38. Nikolich v Goldman Sachs JB Were Services Pty Ltd
• contract of employment expects employee to comply with “office
memoranda and instructions”
• feel good employee manual Working with Us included provisions on
safety, harassment and grievance procedures
• collusion amongst managers meant valuable clients removed from
team
• grievance raised by Nikolich but largely ignored
• employee left work on sick leave due to stress and adjustment
disorder
• employee terminated because he couldn’t return to work and was out
of sick leave

39. • policy documents were held to be part of the employment contract:
responsibilities were mutual, and employer and employee required to
comply
• GSJBW breached own policies on:
- healthy working environment
- grievance procedure
• conduct of GSJBW caused psychiatric damage, employee could not work
• Nikolic awarded 2 years lost income plus 6 months future earnings
Nikolich v Goldman Sachs JB Were Services Pty Ltd

40. James & McKeith v Royal Bank of Scotland Group plc & Ors
• in a merger, RBS published global statement that local redundancy policies
would be honoured for 2 years after date of merger
• James & McKeith had contracts which expressly stated that company
policies did not form part of their contracts of employment
• on termination, RBS initially agreed to pay severance and bonuses to
James & McKeith in accordance with local redundancy policy, in return for
their agreement to sign a deed of release
• the policy included a reference to a ‘deed of release’ but did not specify
the releases that could be sought by RBS

41. • James & McKeith refused to sign deeds and sued RBS claiming severance and
bonuses as a breach of contract
• RBS argued that the employment agreements expressly prevented the
redundancy policy from having contractual force, and alternatively, that
James & McKeith
• the Court held:
– RBS made representations to James & McKeith that the policy would be
honoured
– The policy was written “in the language of contract” and was therefore
incorporated into the contracts
– in the case of the severance component, the policy did not permit RBS to
make payment contingent upon signing a deed of release as the
entitlement had already accrued
– the bonus entitlement was discretionary and therefore could be withheld
James & McKeith v Royal Bank of Scotland Group plc & Ors

42. Contracts and policies: what to do?
• employer can’t have it both ways
• as you probably want the policies to be
binding for your good, you have to accept
the risk they’ll be binding the other way
too
• avoid broad aspirational statements or
commitments you can’t or may not honour
• avoid expressing general
goals/intentions/options as promises or
statements capable of being contractually
binding: build in discretion
• include a term in contract saying policies
are NOT part of the contract
• put in place procedures to ensure
prescriptive policies are followed

43. Policies

44. What should I have policies about?
• work instructions, systems
• statutory requirements: OH&S,
Privacy, Workplace Surveillance
• leave
• EEO and anti-discrimination
• email and internet use
• social media
• drugs and alcohol
• whatever else your circumstances and
experience suggest, such as dress,
training, insurance, smoking, ethics

45. What should a policy contain?
• as much detail as necessary
• but not a mind-numbing amount
• clear guidelines
• who to ask
• the right to vary application of
policy according to circumstances

46. Policies must be:
• communicated and accessible
• clear and unambiguous
• applied
• applied consistently
• reasonable
• applied reasonably, not rigidly,
if circumstances warrant
• fit for purpose

47. Policies not fit for purpose
Richardson v Oracle
• Oracle’s anti-discrimination and harassment policy was the
multinational’s US policy
• no reference to Australian legislation or obligations
• Oracle therefore could not say it had done everything reasonably
possible to avoid harassment within its business
• and therefore could not prove the defence which could have avoided
vicarious liability for employee’s actions

48. Communicate policies to
employees
Williams v Centrelink
• policy: porn is unacceptable
• policy on intranet and screensaver
• W was harassment contact officer
• W sent 23 porn emails, in and out
of office
• 24 employees investigated: 2 sacked
(one of them W), 2 resigned, 20
disciplined

49. Communicate policies to
employees
Williams v Centrelink
• “Everyone does it. No-one would
be offended”
• “My manager said I could”
• “I didn’t see the policy or
screensaver link”
• “Others were treated differently”
• Did his unjust dismissal
application succeed?

50. Communication by:
• training and meetings
• in writing
• by email
• via intranet
• pop-up computer messages
• signs or notices
• reinforced periodically

51. If breach leads to termination, you
must look at the circumstances
• employee sacked for not following
procedure requiring safety goggles to be
worn when cleaning tank, and for
stroppy response when challenged
• policy was clear and justified
• but employee reinstated with serious
warning
• while the policy was clear, it was still
necessary to consider the situation
overall: length of service, clean record,
gravity/triviality of infringement, drastic
consequences to this employee

52. The policy must be reasonable
Internet
• zero tolerance policy on personal use of internet while at work
• employee dismissed for accessing inappropriate websites, but said it was
trivial because he did not go beyond first web-page
• dismissal upheld: the infringement may be minor but the policy was
reasonable and clear
Drugs & alcohol
• the pot-smoking ferry captain: dismissal for failure to disclose
• captain alleged “not affected”
• Dismissal upheld: the zero tolerance policy was aimed at avoiding
arguments about impairment

53. Policies (Cont’d)
Workplace Safety
• Robbery at a petrol station thwarted by attendant who “played dumb” and
pretended he couldn’t access the cash register or cigarette cupboard
• Petrol station attendant dismissed for not following Woolworths Armed
Robbery/Hold-Ups Policy
• Worker had previously received warnings for non-compliance with
policies, including disregard for food safety procedures
• FWC accepted that non-compliance with safety policies potentially
exposes workers and the general public to serious harm and is an
unacceptable risk
• Dismissal was upheld - Tapan Mistry v Woolworths Fuel [2017] FWC 3097

54. Double Standards
• Managing Director of a business bought himself a Lamborghini after 20
years service
• Chief Financial Controller sent a company-wide email with the subject line
“Congratulations you have reached 20 years service on the books .... and
your reward is a Lamborghini.”
• Email also attached a joke resume of the MD which included a list of
hobbies and interests that referred to sexual activities
• CFO was summarily terminated for serious misconduct
• During unfair dismissal proceedings, evidence was led that showed the
company, including the MD had a practice of sending sexually explicit
emails
• CFO awarded $77,800 in compensation for unfair dismissal

55. Questions

56. Thank you for attending
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