Before You Sign an Employment Contract

An employment contract can look straightforward while quietly allocating significant risk. Salary and job title matter, but the clauses that create the most trouble often sit further down the document. A review before signing is usually faster, cheaper and more useful than trying to renegotiate after a dispute begins.

 

1. Pay and award coverage. A salary does not necessarily displace an award, enterprise agreement or the National Employment Standards. Check whether the contract identifies any applicable industrial instrument, what the salary is said to absorb, and whether ordinary hours, overtime, penalties, allowances and annualised-wage record keeping have been addressed.

 

2. Duties and work location. Broad clauses may allow an employer to change duties, reporting lines or location. Flexibility is normal, but the wording should not make the role described during recruitment largely optional. Remote or hybrid arrangements should be recorded if they were material to accepting the job.

 

3. Probation. Employees on probation still receive minimum entitlements, including notice and leave. A contractual probation period is also distinct from the minimum employment period for an unfair dismissal claim, which is generally six months, or twelve months for a small business employer.

 

4. Termination. Check notice periods, payment in lieu, garden leave, summary dismissal language and any right to deduct money from final pay. The National Employment Standards set minimum notice, but the contract may provide more. A clause cannot lawfully undercut statutory minimums.

 

5. Restraints. Non-compete, non-solicitation and non-dealing clauses can affect the next job or business. In NSW, cascading restraints may be read down under the Restraints of Trade Act 1976, but enforceability depends on whether the restraint protects a legitimate interest and goes no further than reasonably necessary. Do not assume an ambitious restraint is harmless merely because it may later be challenged.

 

6. Confidential information and intellectual property. The definitions may extend beyond genuine trade secrets and capture work created outside working hours. Employees should understand what belongs to the employer, what pre-existing material is excluded, and what obligations continue after employment.

 

7. Policies, bonuses and benefits. A discretionary bonus is different from an enforceable entitlement. If policies are incorporated into the contract, a breach may have contractual consequences for both sides. Conversely, an employer may reserve a broad right to change policies or benefits unilaterally.

 

The practical step is to compare the written contract with the offer actually made. List any promises about pay reviews, flexibility, bonus criteria, sponsorship, vehicle use or progression that do not appear in the document, and clarify them before signing. What is left to goodwill today can become the central dispute tomorrow.

 

Sources: Fair Work Ombudsman — Employment contracts; Fair Work Ombudsman — Probation; Fair Work Act 2009 (Cth); Restraints of Trade Act 1976 (NSW).

 

Disclaimer: This article provides general information only and is not legal advice. It does not create a solicitor-client relationship.