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The Importance of an Employment Contract

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Why Employment Contracts are important - ‘she is only a secretary’

An engineering company built their own Employment Contracts for their engineers. They soon didn't waste time getting Employment Contracts for secretaries. Why?

Joanne joined the company as a secretary. She typed letters for the manager. She sent gifts to the clients' wives. She memorised the names of key client employees. Her boss was impressed with Joanne - and she was a loyal and dutiful employee.

One day Joanne was poached by another engineering company. Joanne after leaving telephoned her old company's 20 largest clients. Four moved with her to her new employer. Her old employer's lawyer wrote a letter threatening her with all manner of punishments. Which she quickly dismissed. Why? She had no confidential clause restriction. She suffered no restraint of trade. She didn't even have an Employment Contract. Relying on the latest court cases, she used her mobile as a database to contact more clients.

The moral of this story is simple, without an employment contract you have no protection. All staff should be on some form of employment contract regardless of the duties they perform or how loyal you think them to be. It makes good sense to protect what you have worked so hard to build and establish, for it can all be so easily disrupted if you haven`t put in place the right agreements you need. This is a common example of what transpires in the workplace everyday, regardless of employee roles and positions.

So if you have a Joanne, then immediately draft and present her with an Employment Contract to sign. It isn't too late. An Employment Contract gives you a fighting chance:

> A non-competition clause prevents the Employee from unfairly competing with you after termination.

> Protect trade secrets, customer and client details, suppliers and your systems.

> Stop the employee from stealing your employees.

> Force the Employee to leave on the spot and not work during garden leave.

Remember always to seek professional legal advice.

The needs and legalities vary enormously for both Employees and Employers.

Although the government has a multitude of employment rules and awards designed for one purpose - to protect the employee.  Employers also have the right to protect and safe guard everything they have worked hard to build and establish - and one way is through an Employment Contract.

What is an Employment Contract?

An employment contract is a legally binding agreement between two parties, the employer and the employee, and is designed to give both parties security and protection.

Why Have an Employment Contract?

For the employee a contract gives them the security that they are working for a professional business that has clearly defined its obligations and agreement on all terms of employment.

For the employer they have the security that the employee is fully aware of their obligations and has agreed to comply with the stated terms. For the employer the contract may also endeavour to protect the business clientele and intellectual property such as:

> A radius restriction whereby the contract attempts to impose a geographical radius in which the employee cannot work for a predetermined time period. If either the radius restriction is too large in area or time period excessive, this will be deemed too restrictive

> Theft or misuse of intellectual information whereby the employment contract is protecting the client details specifically service records and personal contact details

> Poaching of clients whereby the clients are deemed the clients of the business and not the stylist

> Poaching or soliciting of other staff members

> Restrictions on advertising for a timeframe whereby one is prohibited from advertising where they are working. This prohibits them from attempting to solicit clients and staff from a place of employment for a specific period of time

Stay Out of the Court

Employment contracts vary enormously from state to state with their enforceability often under scrutiny. The employment law in all states always favours the employee and any attempt by the employer to unduly restrict someone’s right to work will be deemed unfair and dismissed in a legal challenge.

Put it in Writing

As a matter of principle a contract of employment should always be in writing. Oral agreements are usually invalid and are difficult to prove in cases of doubt or if contested. Written contracts create clarity and evidence for both parties.

Provide Details of Collective Agreements

Contracts of employment do not take account of every detail. Often reference is made to terms and conditions in collective agreements, in-company rules or the law. In such a case the new employee should be given a copy of the collective agreement. Collective agreements and shop agreements may cover, among others, voluntary welfare payments, remunerations pursuant to the tariff, work hours, reimbursement of travel expenses and compensation for transfer to a new location.

Talk About it Together

Usually the contract of employment will be explained to the new employee. This gives him/her the chance for requests and to ask for amendments. Generally the employer expects the signing of the contract after a short period of consideration just to give the new employee the opportunity to examine the contract or to have it examined. Upon your signature you enter into a binding contract with your employee.

Whether you are an employee or employer there are numerous legal obligations that you need to live up to. Depending on the state you live and work in there can be many laws governing the employee employer relationship, having legally binding employment contracts avoids misunderstanding and gives both parties absolute clarity about both your rights and responsibilities. Don't let the formality of contracts be a headache, seek professional advice and value the peace of mind when everything is in place.


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