The contract of employment is the first port of call when determining the rights and obligations of an employee and employer. Unfortunately, contracts are complicated. Read on as we dispel five myths to help make things simpler.
1. The contract must be signed: while it is always preferable that an employee sign their contract of employment, it is possible to enforce a contract in the absence of a signature in certain circumstances. If an employee has demonstrated unequivocally through their conduct an intention to be bound by the terms of an unsigned contract, they often will be.
2. Paying “above the award” means the award doesn’t apply: rates of pay and award application are different concepts. An employee who is paid in excess of the minimum rate of pay prescribed by an applicable award will still be entitled to the benefit of the other provisions of that award – for example, those regarding the manner of payment of wages and the process that must be followed in the event of a redundancy.
3. A worker will be a “contractor” if the contract says so: the way in which a contract describes a worker is just one aspect of determining the nature of the relationship between that worker and the organisation that engages them; it is not final. Other relevant considerations include:
- the degree of control exercised by each party;
- the way in which the worker is paid; and
- whether the worker is held out to represent the organisation.
4. Restraints of trade are never enforceable: restraints of trade are among the most complex of contractual provisions, and with good reason. Restraints that, for example, have insufficient regard to the nature of an employee’s role or are against the public interest will not be enforced. But if drafted properly, they can and will often be an appropriate means of protecting an employer’s legitimate interests.
5. Contractual terms won’t change over time: employers should not assume all is said and done once an employee signs the contract. If, for example, an employee receives a significant promotion or new legislation is introduced, it is possible certain terms will become inoperative or new terms will be implied. Contracts should be reviewed regularly to ensure they are up-to-date and reflective of the employment relationship as it stands.
If you think your contracts might need a spring clean, please don’t hesitate to contact any one of our legal team.