Employment can end for various reasons. The employee may resign, you may dismiss or fire them, or you may mutually agree to end their employment. Whoever decides, your employee must leave your workplace as soon as the employment contract finishes.
If you are an employer or small business owner in Australia, then you should know about your obligations regarding employment contracts. An employment contract outlines the nature of your relationship and the employee’s duties. It can be verbal or written but having a written document can benefit both you and your employees as it enhances clarification and minimises miscommunication.
Ending an employment contract
The relationship between you and your employee depends on the nature of the employment contract. Many aspects of employment law also depend on it, so you need to understand what the contract is and how it is put together. An employment contract is legally binding if it has three elements: an offer, acceptance, and consideration. If any of these three is missing, the contract is not legally enforceable. It is best practice to have a written contract of employment signed by witnesses, even though the law accepts verbal contracts too. Some awards do require you to tell employees in writing about, for example, their status of employment or hours of work.
A strong employment contract can:
- Help manage expectations.
- Protect your business.
An employment contract is helpful in two cases: when discussing rights, duties, promises, and agreements, or if a dispute arises. Make sure the contract means what it says, rather than what it ought to mean, so it clarifies those rights, duties, promises, and agreements. Employees will need different contracts based on their role (part-time, full-time, casual, etc).
In a dispute, consider whether the contract has an offer, acceptance, and consideration. If it is a legally binding agreement and you breach that contract, for example, by not paying the promised bonus, you are open to legal action. Employment contracts cannot be less than legal minimum entitlements as per the Fair Work Act, National Employment Standards, Awards or Enterprise Agreements (whichever apply to the employees).
How Peninsula can help you
If you have made the decision to end an employment contract, you need to follow the rules about dismissal, notice and final pay. There are also different rights and obligations when a job is made redundant, or worst case, a business closes.
Peninsula can offer advice on ending an employment contract legally to minimise your chances of facing an unfair or unlawful dismissal claim. Call to talk with one of our expert team.