The next year is always a good time to consider a review of contracts of employment or letters of appointment. We often get queries about contracts of employment and letters of appointment, particularly with clients asking if they have to give an employee a written contract, and if so what information needs to be included.

The bottom line is that there is no statutory requirement for an employee’s terms and conditions to be given to them in writing. However, for a number of difference reasons, we would always recommend that a written document specifying these details is given to an employee as best practice. The reason for putting the employee’s terms and conditions of employment in writing is to ensure that both the employer and employee are certain about what has been agreed, which hopefully will avoid any disagreements down the line when everyone’s memory has faded.

The difference between a contract of employment and a letter of appointment is that a contract of employment is generally a more comprehensive document compared to a letter of appointment. Depending on your business and the position the employee is performing, you can decide which document is most applicable in your circumstances.

Contents
The information that we recommend goes into both documents is listed here:-

• Start date
• Job title
• Whether a Probationary period has been agreed
• Award or Agreement classification
• Rate of pay or salary
• Status, as f/t, p/t or casual
• Hours / days of work, if f/t or p/t
• Reporting structure, so who their manager is
• Frequency of pay
• Notice of Termination, and
• Location of policies and procedures

The contract of employment would contain additional information to this, for example reference to entitlements like annual leave, personal leave, compassionate leave, parental leave and long service leave. In addition, reference could be made to confidentiality provisions, post termination restrictions, if applicable and contain notification in relation to workplace surveillance.

Probationary Periods
One contractual term which often raises queries is probationary periods, and how they work alongside an employee’s minimum employment period. The concept of a probationary period does not exist under the Fair Work Act 2009 and instead reference is made in the Act to an employee’s minimum employment period. The minimum employment period for an employee is now either 6 months or one year, depending on the size of the employer. Where an employer employs fewer than 15 employees (which is calculated by counting all of its permanent employees plus any regular and systematic casual employees) the business is deemed a ‘small business employer’ and its employees will have a minimum employment period of 1 year from their start date.

By comparison the employees of an employer which employs 15 or more staff will have a minimum employment period of 6 months from their start date. The importance of the minimum employment period is that once an employee reaches this length of service they have the right to bring an unfair dismissal claim against the employer if a termination is not dealt with appropriately and in accordance with procedural fairness.

By contrast a probationary period will usually last for a period of 3 months and is something that the employer and employee agree to implement in the contract. The purpose of the probationary period is for both the employer and employee to assess how the position is going and whether the employee needs to be given additional guidance so that they can fulfil the role to the standards expected. The end of the first 3 months is a useful milestone in which to review the employee’s progress. If they have not been performing to the standards expected or they have not improved when given directions, you may decide to terminate the employee’s employment at this stage. As the decision to dismiss is made before the employee reaches their minimum employment period of either 6 or 12 months service, there is minimal risk of an unfair dismissal claim being lodged by the employee.

The minimum notice period of 1 week, as provided for in the NES, should be given to permanent employees and the existence of the probationary period does not affect this minimum notice period.

Workplace Surveillance
An additional term which we recommend goes into a contract of employment, is one regarding workplace surveillance. If your business intends to undertake surveillance of employees at work, whether this be with the use of video or CCTV or if you undertake monitoring of an employee’s computer use and work email, the employee must first be notified in writing. This notification is required by State based workplace surveillance legislation, such as the Workplace Surveillance Act 2005 in NSW. We recommend that notification should be included in the employee’s contract of employment. Without such written notice being stipulated to the employee you will be unable to rely upon any footage or evidence gathered to prove any potential poor performance or misconduct by the employee.

Importance of Company Policies
Company policies are an important tool for an employer in order to provide clarity and certainty to its employees around standards of behaviour and procedures that must be followed. Perhaps more importantly, company policies provide the best method of risk management for an employer. When it comes to defending the actions of the company when a claim arises for unfair dismissal, adverse action or discrimination, if you can point to a policy which sets out the company’s standards and procedures this will greatly assist you.

For example, say a claim was lodged against your business by a female employee for sex discrimination on the basis that a male employee has been harassing her and making inappropriate comments. As the employer, you are vicariously liable for the male employees’ actions in the workplace. If the claim is successful, this could result in significant compensation being paid by the company to the female employee, as well as the bad publicity that goes along with such a claim.
As an employer, you have a legal responsibility to take reasonable steps to prevent harassment and bullying from happening in the workplace. The defence that the company can present would be significantly strengthened if you can show that you have a Workplace Discrimination, Harassment, and Bullying Policy in place. This type of Policy would state that the business is committed to providing a workplace free of discrimination and harassing behaviour and that such behaviour is deemed unacceptable. The policy would inform employees that if they make a complaint of workplace harassment or bullying it will be taken seriously and will be dealt with in a confidential manner. The complaint should be investigated and, if found to be proved, appropriate warnings or other disciplinary action will be taken against the harasser, which may include dismissal.
In this scenario, if the employer can show that the employees involved were given or shown a copy of the policy and they signed a form to say that they had read and understood it, and training was provided on the policy and how it should be implemented in the workplace, the company would have gone a long way to discharging its duty to protect its employees from such behaviour.

Contents
Company policies can cover all aspects of the working environment, and should be tailored to the specific requirements of your business. They are the best place to detail the procedures that employees should follow, for example in a Leave policy, the process of requesting annual leave or maternity leave would be clearly set out.
We recommend that the following policies should be in place, as a minimum:-

• Code of Conduct
• Leave (to include annual leave, personal leave, compassionate leave, long service leave, parental leave)
• Performance appraisals and performance management
• Discipline and termination
• Workplace Discrimination, Harassment, Bullying and Equal Opportunity
• Grievance handling
• Occupational Health & Safety