Employment Contracts & Letters of Offer
Why do we need them?
Having documentation is critical for every employer to help establish the basis of how each of their employees is engaged with their business.
Many Employers forget this crucial step when employing staff. This may be as they believe that since they are paying according to an award & paying the correct wages that it is not necessary.
What is a Letter of Offer?
A Letter of Offer is generally regarded as a brief informal document that outlines the intended offer of a position to a candidate. The Letter of Offer is sent to confirm the conversation between the employer and candidate BEFORE they commence work. It contains basic information such as;
- Type of employment (full time, part-time or fixed-term)
- Job title & description
- Minimum hours per week (if not full time)
- Start & finish times & where they would be working
- On overview of how much & when you will pay them and what award is applicable
This information is usually presented on a single sheet in a ‘fact like’ manner. An offer will often include some additional documentation for the employee to complete if they accept the offer, such as personal details, tax file declaration & superannuation forms.
Taking this a step further, a contract of employment is a legal agreement between an Employer and Employee. The contract sets out the terms and conditions that apply during the employment relationship. It is generally a much lengthier document prepared and signed by both parties of acceptance of a letter of offer.
For example, it will typically set out:
- employee’s duties;
- any probation period;
- remuneration in detail including any penalty rates & allowances;
- leave entitlements;
- performance measures or standards
- confidential information obligations;
- intellectual property obligations; and
- any restraint of trade or non-compete clause.
Employers should consider if they have any specific requirements and seek appropriate HR advice as to how to include these into their Employment Contract.
Why it is smart to have your Employment arrangements in writing?
An Employment Contract can be in writing, verbal, or inferred from the fact that someone performs work for another party, and that the other party pays the worker. On this basis alone, documenting the intent of the relationship and having the other party sign their agreement with & to the terms of the arrangement help to avoid the risks associated with any misunderstandings or disputes that may arise down the track.
Considering smaller businesses employ friends and/or family it can be tempting for both parties to reduce paperwork by not having anything in writing to confirm the working arrangement.
While the relationship may be established under the best intentions, over time the employment relationship may be tested and it is in these times that supportive documentation may need to be called upon, rather than either party’s ‘memory’ of the arrangement.
For an employer, attending a Fair Work mediation around an unfair dismissal claim without supporting contractual documents is akin to throwing dollars down the toilet and this is one time some pre-emptive planning and tailored documentation has tangible rewards.
Fairwork has a number of templates available for businesses to use here.
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