9 Common Employment Contract Mistakes Every employer should avoid

Employers and employees can create employment contracts, which may be written or verbal, to safeguard business interests. However, these contracts must not infringe upon rights and legal protections established by the National Employment Standards, awards, or other agreements.

It’s crucial to ensure the legality and enforceability of these contracts. Employment solicitors can assist you in contract drafting and guide you on protecting business interests, so feel free to contact them for support with creating or reviewing contracts.

Here are common mistakes that every employer should avoid when drafting an employment contract

Avoidable Mistakes Employers Make when Drafting Employment Contracts

Working with employment law advice for employers experts helps you avoid making mistakes when creating employment contracts. Every agreement should be unique and outlined toward the organization’s specific goals. Here are some errors you should avoid

1. Not Paying Attention to Legislation when Creating a Contract

Neglecting legal requirements when drafting an employment contract can render parts or the entire agreement unenforceable. Complying with employment laws for the contract’s effectiveness is vital, especially concerning restrictive clauses like post-employment competition restrictions.

1. Not Putting Industrial Instruments into Consideration.

Disregarding industrial instruments in contract creation is not advisable. While you can’t avoid enterprise agreements or modern awards, you can streamline your contract to align with these instruments while ensuring compliance.

1. Lack of Updating Agreements Regularly

Regularly updating contracts is vital due to evolving employment laws. Provisions valid in the past may no longer be so under current regulations if the contract is over a year old.

1. Using the Same Contract Form in all Situations

Using a one-size-fits-all contract template is not advisable. Employment law solicitors for employers can help you tailor specific employee contracts, considering factors like their role, seniority, and duties. This is essential for clarifying obligations and responsibilities to the business.

1. Not Separating Contracts According to Part and Fixed-term Employees

Distinguishing between different types of employees, such as part-time, fixed-term, temp, and permanent workers, is crucial due to varying legal protections and guarantees. The contract should reflect the worker’s status and comply with applicable laws.

1. Confusing Employee Contracts with Employment Policies

It’s important to differentiate between contracts and employment policies. Contracts are legally binding and require mutual agreement for changes. Non-contractual policies offer flexibility in adapting to industry shifts and dynamics.

1. Trying to Lessen Workers’ Protection Rights

Attempting to reduce worker protection rights through contracts is not permitted. National Employment Standards and registered agreements provide minimum protections, and employees cannot waive these rights through a contract.

1. Exaggerating Post-Employment Obligations

Implementing post-employment obligations should balance protecting the company’s interests and the employee’s right to earn a living. Overly broad non-compete clauses may not be enforceable, necessitating careful drafting within legal bounds.

1. Over-defining Confidential Information

Avoid defining confidential information too expansively. While your organization can protect trade secrets through contract terms, it’s essential not to create a broad definition that prevents an employee from using common industry knowledge in a future job. Any restriction on using confidential information should be precise and meticulously drafted for the court to consider its enforcement.

Winding Up 

When creating employment contracts, you should be vigilant in avoiding common mistakes that could compromise the legality and effectiveness of these agreements. Seeking guidance from employment law experts is essential for crafting contracts that align with legal requirements while protecting business interests. Precision in defining terms, updating agreements, and respecting worker protection rights are critical elements in successfully formulating employment contracts.

Kevin Young