If you’re starting a new job in Australia, you might be wondering what the difference is between an employment contract and an employment agreement. While they may sound similar, some key distinctions exist between these two types of documents.
In this blog post, we’ll look at the differences between employment contracts and employment agreements in Australia, so you can understand what’s expected of you when signing on the dotted line.
What are Employment Contracts and Employment Agreements
There are a lot of different terms that are thrown around when it comes to employment contracts. Employment contracts, employment agreements, and offer letters are all standard terms that you may have seen before.
But what do they mean, and more importantly, which one is right for your business?
In Australia, an employment contract generally refers to the overall agreement between an employer and an employee. This contract will set employment terms and conditions, including work hours, salary, and leave entitlements.
An employment agreement is a more specific type of contract that sets out an employee’s specific duties and responsibilities. It is common for employment agreements to be used when an employee has a high level of responsibility or when there is a need for a more detailed contract.
The Key Differences Between an Employment Contract and an Employment Agreement
The critical difference between an employment contract and an employment agreement is that one party can terminate an employment contract. In contrast, the employer can only terminate an employment agreement.
The National Employment Standards (NES) are a set of minimum requirements that all Australian workers must be provided with by their employer. The four main types of leave are annual, compassionate, community service, and personal/care.
An employment agreement can provide additional entitlements above and beyond the NES but cannot exclude any of the entitlements set out in the NES.
An employment contract can be either written or verbal, but it is advisable to have a written contract to avoid any disputes later on. An employment agreement must be in writing and signed by both parties.
You should seek legal advice if you have questions about your employment contract or agreement.
Which One Should You Choose for Your Business
Employment contracts and employment agreements both have their advantages and disadvantages. It’s essential to weigh the pros and cons before deciding which is right for your business.
Advantages of an Employment Contract
- Gives a clear overview of the terms and conditions of employment
- Sets out the specific duties and responsibilities of an employee
- Can be used to protect confidential information
- Makes it easier to enforce company policies
Disadvantages of an Employment Contract
- Can be inflexible and difficult to change
- May not cover all eventualities
- Can be expensive and time-consuming to put together
Advantages of an Employment Agreement
- Can be more flexible and more accessible to change than an employment contract
- May cover a more comprehensive range of eventualities
- Can be cheaper and quicker to put together
Disadvantages of an Employment Agreement
- May not give a clear overview of the terms and conditions of employment
- May not set out the specific duties and responsibilities of an employee
- Can be more challenging to enforce company policies
It’s up to you to decide which type of contract is right for your business. Both have advantages and disadvantages, so weighing the pros and cons before deciding is essential.
The Bottom Line
The main difference between an employment contract and an employment agreement in Australia is that an employment contract is legally binding, while an employment agreement is not.
An employment contract sets out the terms and conditions of your employee’s job, while an employment agreement just outlines the general expectations of both the employer and employee.
If you’re looking to hire employees in Australia, it’s important to understand the differences between these two documents to choose the one that’s right for your business.
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