In Australia, many organisations attempt to review employment contracts in the middle of the year along with wages. Given the numerous legislative changes in recent years, this has been essential.
Yet, it is a busy time. As a result, thorough employment contract reviews get overlooked in the rush to ensure wage compliance, implement salary increases and roll out new strategies.
With so many Fair Work amendments and accompanying policy changes in recent years, many employment contracts no longer reflect current legal requirements, or how work is performed in practice. Often employees or employers find this out the hard way - when there is a dispute!
January is therefore a good time to undertake a thorough review of your employment contracts in preparation for the upcoming year. We asked our Workplace Relations experts what to look out for.
1. Employment type and engagement structure
The first step is to check that contracts accurately reflect the working relationship with the employee. This includes confirming:
- Employment status i.e. casual, maximum-term or permanent employee
- Levels of control and supervision
- Whether the hours, location and duties align with their actual day to day
It’s a key starting point to determine whether the employee is classified correctly under the relevant award.
2. Casual employment arrangements
Casual contracts can only be used where work is genuinely casual. Employers will ideally have mechanisms in place to review whether:
- Casual loadings are paid correctly
- Hours have become regular and ongoing
- Casual conversion rights are being managed correctly
- Information Statements are distributed to relevant employees
Employer concerns about compliance with Closing Loopholes legislation for casual employees has reduced causal employment in Australia, despite market instability. However, with effective contracts, staff training and processes for monitoring, it should not be dismissed as a viable option for employers and employees.
3. Fixed-term contracts
As recent amendments restrict the use of fixed-term contracts, you will need to review contract length, extensions and whether the role is ongoing in nature. It is also important to confirm whether the Fixed Term Contract Information Statement has been issued, or an exception applies.
Examples of where exceptions may apply include:
- Apprenticeships (most common exception)
- Above the high-income threshold
- Organised and high-performance sport
- Non-profits or NGOs subject to government funding
4. Pay, classification and entitlements
Pay clauses need to be reviewed to ensure ongoing award compliance, including confirming award coverage and classification levels, current base rates following annual wage increases, allowances, overtime provisions and the effectiveness of any set-off clauses. Roles and responsibilities often evolve over time, so checking again at the beginning of the year can help prevent position drift and possible underpayment. It is easy to forget to check contract and job description alignment with the relevant award.
It is recommended that Superannuation compliance also be reviewed this year, as organisations will be required to make contributions at the same time as salary or wages from 1st July 2026. This will replace the current requirement for quarterly payments.
5. Hours of work and the right to disconnect
An effective contract will clearly set expectations around hours of work and availability. Awards and recent legislation have become even more descriptive regarding these factors. Flexibility clauses, overtime requirements and after-hours contact expectations need to be reviewed to ensure alignment with awards and ‘right to disconnect’ obligations. In some roles, it may be appropriate to specify where it is reasonable to make contact outside of hours.
If you’re unsure about how to approach this, it may be worthwhile to have your contracts reviewed by a workplace relations expert.
6. Termination and notice provisions
Termination clauses must not undercut the National Employment Standards (NES). To ensure you don't, review notice periods, redundancy references, probation clauses and how assignment end dates are addressed, particularly in labour hire or project-based roles.
While casuals generally have no termination notice provisions under the Fair Work Act, you should always confirm this with the relevant award. However, notice periods can be included in their contract if organisations choose to include this.
NES minimum notice periods are as follows:
| Period of continuous service | Minimum notice of period |
|---|---|
| 1 year or less | 1 week |
| More than 1 year - 3 years | 2 weeks |
| More than 3 years - 5 years | 3 weeks |
| More than 5 years | 4 weeks |
Employees over 45 years old who have completed at least two years of service when they receive notice are given an additional week of notice. Please note, that some awards may be greater than the NES timeframes detailed above.
7. Confidentiality, intellectual property and restraints
Specific contract clauses relating to confidentially, intellectual property and restraints need to reflect modern working arrangements. It is therefore recommended that you review confidentiality obligations, intellectual property ownership and the reasonableness and enforceability of post-employment restraints.
Contract clauses for confidentiality and intellectual property must be directly connected to protecting legitimate business interests, with post-employment restraints reasonable in scope, length and geographic location.
The Federal Government has indicated they plan to limit the use of post-employment restraints, particularly for lower paid workers. While no final reform has been enacted, it is timely to ensure restraint clauses are role specific and supported by clear business justification.
8. Policies referenced in the contract are fit for purpose
January is a good time to review policies referenced in contracts. This may involve assessing whether any new policies have been introduced that might be relevant, and confirming policies are current, compliant and consistent with contract terms.
For example, if you put five weeks leave in the contract, the policy should reflect this. It is important to note that in a dispute, the contract will override a policy, so this is a necessary step.
Finally, it is important to note that there are often legacy clauses in contracts of longer-term employees that need to be addressed. When you make changes to contracts, it is advised that new contracts are reissued by agreement with employees.
If you need assistance reviewing or developing employment contracts, contact our Workplace Relations team today.
