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Perspective

Employment contracts: 5 key steps before making an offer

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In Australia contracts of employment arise where an employer makes an offer of employment and the candidate agrees. It need not be a formally drafted contract – it may be an exchange of emails and discussions. Once an offer of employment is accepted, where the agreement is silent, such as notice on termination, the common law will cure the specific gap by determining what would be reasonable.

For employers and employees alike, this is a disaster. You only get to find out what the job is, what is notice and whether the conduct or performance breached the contract after the employee has left and you before a court or tribunal. Therefore, an employer must be clear that the only offer of employment capable of acceptance is the formal offer of employment and that the relationship of employee and employer is not cemented until a signed copy of the formal offer is received by the employer.

5 keys steps a business should take are:

1. Determine whether the person will be an employee or contractor

A person will be an employee where you control how they do their work. If the person controls their own work methods, has genuine goodwill and a business structure, trades through an entity and uses assets to generate income they are more likely a contractor

2. Define the job and document its physical and psychosocial obligations

Before you offer a job take time to ascertain what you actually need, what skills and experience are required and carefully document it

3. Ascertain the person’s capacity and capability to do the job

Make sure the candidate has the skills, experience, resilience and physical and mental capacity to undertake the job. By providing the candidate with an accurate job description, they can self-assess their capacity and capability and marshall evidence to respond to your expectations. The employer can require assessments and develop questions that test capability and capacity.

4. Draft the contract

Ensure all the terms (Fair Work Act 2009, Leave legislation, Awards and Enterprise Agreements) are clearly part of the employment relationship.

5. Make the formal offer that excludes all past negotiations and representations

The idea of offering a person a job is simple, however the process of doing it properly is not simple. To ignore or skip any of the above steps can give rise to various issues and risks for the business, costing you time, energy, and the decline of a positive and productive employment relationship.

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