Employment Contracts in Australia: What Must Be in Every Contract You Issue

Every employee should have a written employment contract — but having a contract does not mean you are compliant. Many small businesses use generic contract templates that are years out of date, legally problematic, or contradict the modern awards and legislation that actually govern the employment relationship.

This guide explains what must be in every employment contract, what common clauses are legally ineffective, and how to protect your business.

Are Employment Contracts Legally Required?

In Australia, employment contracts are not legally required to be in writing. A verbal offer and acceptance creates a binding employment contract. However, without a written agreement, disputes about agreed terms — hours, salary, duties, termination notice — become he-said-she-said.

As a practical matter, every employee should have a written contract before they start work.

What Must Employment Contracts Include?

There is no single federal law prescribing the required contents of an employment contract. However, certain information must be provided either in the contract or as part of onboarding:

The Fair Work Information Statement

Every new employee must be given the Fair Work Information Statement before or as soon as possible after they start employment. This is a document produced by the Fair Work Ombudsman that outlines employees' rights under the Fair Work Act.

Additionally, casual employees must receive the Casual Employment Information Statement before or as soon as possible after they start.

These can be delivered separately from the contract — but ensure you have a record of delivery.

Minimum Contract Contents

While there is no mandatory contract checklist in the Fair Work Act, the contract should at minimum specify:

Employment type: Full-time, part-time, or casual. For part-time, the contract should specify the agreed regular hours and/or days of work. For casual employees, the contract must reflect the casual employment definition (no firm advance commitment to ongoing work with agreed patterns of hours).

Commencement date: The start date of employment.

Remuneration: The base rate of pay. If the employee is covered by a modern award, the contract should reference the award and confirm that the rate meets or exceeds the relevant award minimum.

Modern award or enterprise agreement: If a modern award applies, specify which one and the employee's classification. This is important — many disputes arise because neither party knows which award applies or what classification the employee holds.

Duties: A description of the employee's role and responsibilities. Does not need to be exhaustive, but should be clear enough to establish expectations.

Hours of work: For full-time employees, 38 hours per week plus reasonable additional hours. For part-time, the agreed regular hours. Note that "reasonable additional hours" is a term from the Fair Work Act — what is reasonable depends on the circumstances and any applicable award provisions.

Leave entitlements: Reference to the NES entitlements. The contract should not purport to exclude or reduce NES entitlements — any term that does so is void.

Notice: The notice period for termination by either party. Note that minimum notice periods are set by the NES — any contract that provides less is overridden by the NES minimum.

Superannuation: Reference to superannuation obligations.

Confidentiality: If the role involves access to confidential business information, a confidentiality clause.

What Contracts Cannot Include

A contract cannot reduce an employee's entitlements below the NES minimums or applicable modern award minimums. Any term that purports to do so is void — meaning the contract term has no legal effect and the employee retains their minimum entitlements regardless.

Common void or ineffective clauses include:

Below-award pay rates: If the contract specifies a pay rate below the applicable award minimum, the award minimum applies regardless. The contract rate is void to the extent it falls short.

"No overtime" clauses: A term stating the employee will never receive overtime, without corresponding analysis that their salary is high enough to absorb all overtime entitlements, can be ineffective.

All-inclusive salary clauses without specificity: Many contracts include a clause stating that the employee's salary is intended to be "all-inclusive" of penalty rates, allowances, and overtime. These clauses often fail because they do not specify which entitlements are being absorbed and by how much. An all-inclusive salary arrangement requires careful analysis against the award to ensure the salary actually covers the entitlements it purports to absorb — and the reconciliation requirements under the award must be met.

Restraint of trade clauses that are too broad: Restraint clauses must be reasonable in geographic scope and duration to be enforceable. Overly broad restraints — "employee must not work in this industry for 5 years anywhere in Australia" — are likely unenforceable.

Terms that exclude unfair dismissal rights: You cannot contract out of Fair Work Act protections, including unfair dismissal rights.

Probationary Periods

Employment contracts commonly include a probationary period — typically 3 or 6 months. During this period, employment can be terminated with shorter notice.

Key points about probationary periods:

• A probationary period does not prevent an employee from making an unfair dismissal claim if the minimum employment period has been reached. The minimum employment period for small businesses is 1 year — so a 6-month probation does not protect a small business from an unfair dismissal claim at month 7.
• Probationary periods do not change accrual of leave entitlements — leave accrues from day one.
• Terminating during a probationary period still requires you to follow the minimum notice provisions of the NES.

Casual Employment Contracts

Since the Casual Employment reforms of 2021 and the Closing Loopholes reforms of 2024, the definition of casual employment matters significantly. A casual employment contract must:

• Not include a firm advance commitment to continuing employment with an agreed pattern of hours
• Reference the employee's right to casual conversion under the NES
• Specify that the casual loading is compensation for the absence of paid leave entitlements (and identify the loading amount)

A casual contract that describes regular, recurring hours with ongoing expectations may actually be creating a permanent employment relationship — regardless of what you call it.

Updating Contracts Over Time

Employment law changes frequently. A contract that was compliant in 2021 may not reflect 2026 obligations. Review contracts periodically, particularly when:

• The applicable modern award has been substantially amended
• New NES entitlements have been introduced (as they have been several times since 2021)
• An employee's role or terms change materially

An employee does not need to sign a new contract for changes to their NES and award entitlements to apply — those entitlements flow from the law, not the contract. But updating contracts to reflect current arrangements reduces ambiguity and dispute risk.

Practical Steps

1. Review all existing contracts — check they reference the correct award and current rates
2. Ensure new contracts are signed before employment starts — not weeks later
3. Issue the Fair Work Information Statement and (for casuals) the Casual Employment Information Statement on or before day one
4. Have a lawyer review your template contracts — particularly any all-inclusive salary, restraint, or casual conversion clauses
5. Maintain copies — keep signed contracts for the duration of employment plus 7 years

How Reguladar Helps

Employment contracts intersect with modern award compliance, the NES, and legislative changes. Reguladar tracks the employment law obligations specific to your business and workforce type, surfacing changes that affect your contracts and onboarding processes.

When a new employment law reform takes effect — as has happened repeatedly in recent years — Reguladar flags what has changed and what your contracts and processes may need to reflect.

Get clarity on your employment law obligations. Start your free compliance check at Reguladar and protect your business with a complete compliance picture today.