When hiring employees in WA, employers have a legal obligation to provide clear, fair, and comprehensive employment contracts. These contracts set out the rights, responsibilities, and expectations of both the employer and employee, helping to prevent disputes and create a harmonious working relationship. But what exactly should be included in an employment contract in WA? How can you, as an employer, best protect yourself, the business and existing staff when hiring a new employee?

In this article, we will set out some key pointers and things to think about when drafting an employment contract in WA , to ensure your employment contract complies with Australian employment laws and best practices.

1. Job Title and Description

One of the first things employers should specify is the employee’s job title and a clear job description. This section outlines the employee’s role and responsibilities, providing clarity about what is expected from them in the workplace.

A well-defined job description helps avoid misunderstandings and ‘scope creep’. It also serves as a reference point for performance reviews and can be vital in cases of dispute over job duties. Be sure to describe the key responsibilities, working hours, and whether the role is full-time, part-time, casual, or temporary.

2. Employment Type (Full-Time, Part-Time, Casual)

Employment types vary and impact the terms of the contract. Employers should specify whether the employee is being hired on a full-time, part-time, or casual basis. This distinction is important as it affects various aspects of the contract, such as:

• Entitlements to paid leave (annual leave, personal leave)
• Job security (casual employees typically don’t have the same job security as permanent employees)
• Notice period for termination

Casual employees, for example, generally don’t have access to paid leave, but they receive a casual loading (typically 25%) on their hourly rate. Full-time and part-time employees, on the other hand, are entitled to various paid leave benefits and other rights.

3. Start Date and Probationary Period

The employment contract should include the start date of employment and specify whether there is a probationary period. A probation period allows employers to assess the suitability of a new hire before making a long-term commitment.

In WA, a probationary period typically lasts between three to six months, but this should be clearly outlined in the contract. The employer should also specify the terms under which the probation can be terminated or extended, along with any rights and obligations during this period (such as notice periods).

4. Salary and Benefits

The salary or wage rate is one of the most crucial components of an employment contract. Employers should state the employee’s remuneration, including the rate of pay, how often they will be paid (e.g., weekly, fortnightly, or monthly), and any applicable overtime rates or bonuses.

Additionally, employers should specify any non-monetary benefits, such as health insurance, company cars, or professional development allowances. If there are any other benefits, such as access to bonuses, commissions, or stock options, these should be clearly defined in the contract as well.

For compliance with the Fair Work Act, or Industrial Relations Act, the salary should meet or exceed the minimum wage standards set by the Fair Work Commission or the WAIRC, as well as any applicable industry or award conditions.

5. Working Hours and Overtime

Employers should outline the expected working hours in the contract, including the regular working week and any flexibility arrangements. For example, if an employee is required to work outside regular office hours or on weekends, this should be mentioned.

Additionally, the contract should address overtime policies, such as whether overtime is paid, how it is calculated, and any limits to overtime hours.

If applicable, be sure to detail how many hours the employee is expected to work each day or week, and whether there is flexibility in terms of working arrangements (such as hybrid or remote work options).

6. Leave Entitlements

The employment contract should clearly state the leave entitlements the employee is entitled to. In WA, this includes:

• Annual leave: Full-time employees are entitled to 4 weeks of paid annual leave each year, while part-time employees are entitled to a proportional amount.
• Personal/carer’s leave: Employees are entitled to 10 days of paid personal/carer’s leave each year.
• Parental leave: Employees may be entitled to unpaid parental leave after a qualifying period of employment, subject to the Fair Work Act.
• Public holidays: Employers should specify whether employees will be paid for public holidays and any policies regarding working on those days.

For casual employees, it’s important to note that they are not entitled to paid leave benefits, though they do receive a casual loading in lieu of these entitlements.

7. Notice Period and Termination of Employment

Employment contracts should include details about termination procedures. This includes the notice period required by both the employer and the employee if either party wants to end the employment relationship.

The Fair Work Act sets minimum notice periods depending on the employee’s length of service, but employers can include stricter conditions in the contract. Typical notice periods might range from one week to four weeks.

Employers should also specify the grounds for dismissal and any performance management processes that will be followed if an employee’s performance or behaviour is under review. This helps protect employers from unfair dismissal claims.

8. Confidentiality, Intellectual Property, and Non-Compete Clauses

Employers should include clauses related to confidentiality, intellectual property (IP), and non-compete agreements, especially for employees in sensitive or high-responsibility roles.

• Confidentiality: Employees should agree not to disclose confidential company information or trade secrets during and after their employment.
• Intellectual Property: If the employee is involved in creating IP, such as inventions, software, or designs, the contract should specify that the company owns the rights to any such creations.
• Non-compete clauses: If necessary, employers can include a clause that restricts the employee from working for a competitor or starting a competing business for a specified period after their employment ends. However, these clauses must be reasonable and not overly restrictive.

9. Health and Safety Obligations

Employers are required by law to provide a safe working environment. The employment contract should include the employer’s commitment to maintaining health and safety standards, as well as the employee’s obligation to follow health and safety protocols.

10. Dispute Resolution Process

Lastly, an employment contract should specify the procedures for resolving disputes between the employer and employee. This might involve internal grievance processes, mediation, or, as a last resort, legal action.

Conclusion

An employment contract is a critical document that establishes the terms of the working relationship between an employer and an employee. In Western Australia, employers must ensure that their contracts are clear, fair, and compliant with both state and federal laws. By including the essential elements outlined above, employers can create a positive working environment, reduce the risk of legal disputes, and ensure that their employees have a clear understanding of their rights and obligations.

It’s always advisable to seek legal advice when drafting employment contracts to ensure they comply with current employment laws and industry standards. Contact Fraser & Associates Lawyers today to see how we can help.