Australia: The best employment contracts and workplace policies for your business

Last Updated: 13 May 2016
Article by Charles Power

Most Read Contributor in Australia, September 2017

Paying an annualised salary

  • Is there an "set-off" clause in the employment agreement?
  • Does the Individual Flexibility Agreement (IFA) clause in our Enterprise Agreement allow IFAs to be made about the payment of overtime, penalty rates and allowances?
  • Is the employee covered by an award which includes an annualised salary provision?
  • Are records being kept about when employees are performing work? Remember that you will not need to keep records if the annualised salary is made pursuant to an IFA
  • If the arrangement is pursuant to an employment contract or award provision is the annual salary sufficient to compensate the employee for their entitlements?
  • If the arrangement is pursuant to an IFA, is the employee "better off overall" by receiving the IFA?

Returning to work

  • Has the employee been paid for their Keeping in Touch days?
  • Have I communicated with the employee about any changes, or proposed changes to their pre-parental leave position?
  • Has my employee notified me of the date they are intending to return to work from parental leave?

Flexible working arrangements

If an employee has made a request for a FWA, you will need to consider:

  • Is the employee entitled to make the request on the basis that one of the relevant circumstances under section 65 of the Fair Work Act applies?
  • Has the employee completed at least 12 months of continuous service immediately prior to making the request (or is the employee a long term casual that has a reasonable expectation of continuing employment?)?
  • Can the requested changes be accommodated? If not, are there "reasonable business grounds" for refusing the request?

Reasonable business grounds, includes:

  • that the new working arrangements would be too costly for the employer
  • that there is no capacity to change working arrangements of other staff to accommodate the request
  • that it would be impractical to change the working arrangements of other employees or recruit a replacement employee to accommodate the employee's request;
  • that the new arrangements would be likely to result in significant loss of productivity or efficiency;
  • that the new arrangements would be likely have a significant impact on customer service.
  • Have you responded to the FWA request in writing within 21 days? If the request is refused, have you included the reasons in the response to the employee?

Variations to contract of employment

  • Is the employee covered by a modern award (if so, does the consultation term require you to consult about the proposed change)?
  • Does the employment contract clearly state how variations to the contract are to be made? Have you complied with the clause regarding variations to the contract (ie, by agreement in writing and signed by both parties)?
  • Does the employment contract contain a term allowing you to reasonably require the employee to perform other duties (other than those set out in the employment contract)? If so, have you considered whether he other duties consistent with the employee's position and commensurate with their skills/expertise?
  • Do you have a term in your employment contract that states the terms of the contract continue to apply notwithstanding changes to an employee's position, remuneration and location?

Workplace investigations and disciplinary action

  • Do you know which document/s regulate the employment?
  • Is the company policy clear about investigation process and disciplinary steps?
  • Is the company required to follow a particular process?
  • Is an investigation necessary? Hint - not always – try to draft with some flexibility.
  • What happens to the employee during the process?
  • Does the contract allow for a stand down?
    • Generally need a specific term in employment agreement allowing for suspension/stand down in investigation process – should always be with full pay.

Does the policy set out a fair investigation process which incorporates natural justice and procedural fairness:

  • Confidentiality of process
  • Timeliness of action
  • Who will investigate in what circumstances?
  • Clear allegations with supporting evidence, if it exists
  • Clear what the possible outcomes could be i.e. nothing, counselling, training, transfer, warning or termination
  • Opportunity to respond in person with a support person
  • Opportunity to respond in writing and provide documents


  • What type of employment agreement is it, eg fixed term, maximum term, permanent or casual?
  • How much notice do you want the employee to give you if he/she resigns?  Does the employer have to give the same notice?
  • Is less notice required in the probationary period?
  • Do you want to be able to put the employee on garden leave?

Bonus, incentive and commission

  • Is the arrangement contractual in nature or is it contained in a policy?
  • What behaviour are you rewarding or incentivising?
  • How will the behaviour be measured, eg KPIs, employer making budget?
  • What if business gets tough – how can you vary the bonus/incentive plan?
  • Is superannuation included in the amount or do you have to pay superannuation on top of the bonus/commission?
  • If the employee's employment ends, does he/she lose the right to be paid any of the bonus or commission, or do they get a pro-rated amount?  What about if he/she is summarily dismissed?

Drafting a restraint clause

  • What is my business?
  • Who are my competitors (existing and potential)?
  • What is the geographical scope of my market? e.g. if I only do business in Eastern seaboard States of Australia, a restraint which operates throughout Australia will most likely be unreasonable.
  • What interests do I need to connect in my business through the restraint i.e. confidential information, customer connection, staff connection?
  • How could an ex- employee damage those interests if he or she leaves my employ? e.g. if I am employing an IT person who will have no access to confidential information, I should not consider imposing a restraint on that person
  • What kind of post-employment restraint would provide a reasonable protection for this interest? 

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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