Significant Clauses to Check Before Signing an Employment Contract




Significant Clauses to Check Before Signing an Employment Contract

When you are hired for a new job in Australia, you will be provided with employment contract (sometimes also known as an employment agreement).

An employment contract explains the rights and responsibilities of both you and your new employer. It’s a wise move to spend some time reading the employment contract thoroughly as there can be a lot of important information in there, including clauses that you may never have encountered before.

In this article, we’ll discuss some of the important clauses you may find in an employment agreement.

Estimated reading time: 7 minutes

Employment contract clauses

Here are some of employment contract clauses that you should be aware of:

Work time

The type of employment arrangement you are getting into with your new employer is the first thing you should know.

Most employment agreements will include a letter of offer outlining the fundamental particulars of the position you have been hired for.

Along with this relevant information, you should also pay attention to the important provisions that will define your rights and obligations under the employment agreement. Some important phrases include:

Working hours and overtime — your contract should specify the expected working hours (which will be dependent on whether you’ve been hired on a full time, part time, or casual basis). It should also explain whether your employer can make you work extra hours and if you will be compensated for those hours.

Leave — for information regarding the employer’s leave benefits, you should review your agreement. Under the National Employment Standard, your company may be required to offer you some standard leave benefits, including annual leave and personal/caregivers leave. Employers may decide to provide workers with more paid vacation time as a perk.

You should also look into the company’s policies on any mandatory leave that you may need to take. As some companies don’t operate during the holiday season, you may be required to take some of your annual leave during a specified time each year.

Flexible working arrangements — in recent years (and partly as a result of the COVID-19 pandemic), some workplaces have provided their employees with flexible working arrangements, including working from home and flexible start and finish times. Make sure you check your contract for any information regarding flexible working arrangements.

Probationary periods

Many job contracts will include a probationary period. This is an important clause as during the probationary period, it’s a time for the employer to assess if you are suitable for the role and the business.

Not every employer will require a probationary period, however, it is important to be aware whether yours does. A probationary period allows an employer more discretion to terminate an employment contract without the risk of certain claims being made against them. Employees are still protected though under Fair Work’s general protections claims (if they have been treated unfairly during their employment period).

Depending on the terms of the contract, the probationary period may also offer the employee some leniency if they wish to terminate their contract during the period.

Probationary periods are not legally required, nor is there a minimum length of time that the period needs to be, however commonly a probationary period will be between 3 to 6 months in length.

Job duties and limitations

In your employment contract, make sure the job description and list of tasks accurately reflect the discussions you’ve had with your employer.

This controls the expectations for both parties and creates a clear understanding before you start working, preventing the imposition of any new duties that you are unable or unwilling to take on.

Expenses and salary

Your contract should specify your wage. It may include hourly rates or annual salary amounts. It should also specify your superannuation entitlements.

On top of your wage or salary, your company may also be required to cover some expenditures. Make sure the appropriate clause specifies the amount of the allowance your employer will give you.

Benefits and bonuses

There are a number of different benefits or bonuses that may be included in your employment contract.

Some of the common benefits or bonuses you may see in a contract include:

  • mobile phone allowances;
  • car allowances;
  • education allowances;
  • sales commissions;
  • annual bonuses;
  • parking;
  • relocation packages;
  • travel expenses reimbursements; and/or
  • healthcare benefits and discounts.

The contract may also include how you can access these benefits.

Intellectual property ownership

If you are creating intellectual property for a company as part of your employment, you may find clauses in your employment agreement regarding the ownership of that intellectual property (IP).

The scope of your duties regarding creating the IP should be made very clear in the contract, as should the ownership details. Usually, if you’re creating intellectual property during your employment within the scope of your role, that IP will be owned by the business. However, this may vary depending on the type of work that you do, but it is important to be aware of who owns the relevant IP.


Many employment contracts include information about confidentiality, in order to protect the interests of the business.

You may be required to sign a non-disclosure agreement when you start your job, or there may be times that you are required to sign these agreements throughout your employment period. This will usually be dependent on the type of industry you work in and the nature of your employment.

Detailed confidentiality clauses may be included in employment agreements. But, if it isn’t included in the contract, employees should still continue to uphold secrecy under common law.

The confidentiality required in your role may extend to after your employment period ends, which we will cover below (ongoing obligations). Here are other things you need to know about confidentiality agreements.

Employment termination details

You should pay special attention to the contract’s termination clauses. Here you can see the list of grounds for contract termination, together with the minimum amount of notice the employer is required to give you. Be aware of your rights in the event that your contract is cancelled.

An employee must be provided with written notice of the day of termination by their employer, as well as be given the correct period of notice of their termination.

The minimum notice periods for termination are as follows:

  • one year or less of continuous service — one week’s notice;
  • more than one year but less than three years of continuous service — two weeks’ notice;
  • more than three years but less than five years of continuous service — three weeks’ notice; and
  • more than five years of continuous service — four weeks’ notice.

As an employee, you may be required to provide a certain amount of notice when resigning from your job with a company. This period may vary, depending on the business, and could be from one week up to four weeks’ notice.

Ongoing obligations

Even when you finish working with your employer, there may be clauses in your contract regarding how you may conduct yourself after your time with them.

These types of clauses are usually in place to protect the interests of the business and may cover information regarding working with current clients of your employer for a period of time after your employment ends, establishing a competing business or trying to recruit employees.

These restraints need to be carefully worded and considered reasonable in nature. If you’re unsure of any of these clauses, don’t be afraid to question them.

Other documents

You’ll probably get several other documents along with your employment agreement. The National Employment Standards Information Statement, staff handbook and other policies, as well as tax and superannuation forms, are just some of these documents. It’s vital to read these documents carefully. Your employer may rely on the staff handbook as evidence of where you might not have complied (in the event that there are any problems with your performance or behaviour).

Do you need help with an employment contract dispute?

At Gibbs Wright Litigation Lawyers, we can help employees and/or employers who may be involved in a contract dispute. These matters can be time consuming and difficult to navigate without the right advice and knowledge. Our unparalleled level of legal services has been a hallmark of our continued success with clients ranging from private citizens to Australian companies. It is best to get in touch with one of our experienced legal team members to find out more about your rights and privileges.

About The Author