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An employment contract can be in writing or be verbal. It is generally an agreement between the employer and the employee which outlines the terms, conditions, and warranties of employment, specifies the duties and liabilities of the employer and the employee with respect to each other as well as the nature and the parameters work to be performed. This is a very important document that may constitute the foundation of the rights and responsibilities of both the employer and the employee.

Obviously, if the employment contract is verbal, any disputes relating to its terms will be of a more complex nature because the question of what evidence establishes the contract’s terms and conditions will be more involving. Difficulties can however arise in relation to written contracts, especially if they have been poorly drafted and are therefore difficult to interpret.

It is always a good idea to read an employment contract very carefully before signing it. The language that is used may have a specific meaning that might differ greatly from its ordinary definition in every-day usage. If a potential employee is unsure of the meaning of certain terms that are used in the contact of employment, or what the meaning of a particular section or part may be, it is often wise to seek legal advice from a legal practitioner that deals with employment law matters.   We have a team of employment lawyers at Navado.

Remember, an employee has the right to negotiate the terms of the contact of employment. Navado employment lawyers can assist in offering strategic advice on employment contracts so that the employee does not sign onto or accept responsibilities that are unfair, onerous or unjustified. Statutes and laws may govern the legality of certain provisions in a contract and may impact on the rights of both the employer and the employee as well. Any employment contact advice will require your employment lawyer to read the employment contract and if necessary conduct the relevant legal research before providing specifically tailored legal advice.

Express Duties

Express duties are the terms and conditions that are explicitly stated in the document, or documents that form the employment contract. Sometimes the employment contract can be one convenient document, but it is not unusual for there to sometimes be other documents that are cross-referenced or referred to (such as employment polices of various forms and/or descriptions) and thus bring other obligations, responsibilities and duties into the relationship between the employer and the employee.

Express terms should be clear and unambiguous. Nevertheless, confusion about the meaning of some terms can lead to disputes between the employer and the employee. In situations such as these, extrinsic material can assist in the correct interpretation of vague terms, but the operation of an “entire agreement clause” can hamper this process. In this case, the law can intervene to imply terms into the contract.

Implied Duties

The Courts have held that all contracts have general implied terms such as the duty of care, the duty to follow reasonable instructions, the duty to act in good faith, the duty to co-operate and the duty not to act in such a way as to make the other party’s discharge of their obligations impossible. In employment contracts, the law may imply terms that relate to the payment of wages, leave entitlements or notice requirements. The extent of these duties, and their specific meaning, will be assessed in the context of each individual case.

For example, some types of contracts may have a heavier duty to co-operate than others. These situations will mean that if one party has an obligation to do something under the terms of the contract and doing that thing requires some form of co-operation with the other party, that other party may have an obligation to facilitate the first party’s actions. This means that if there is no co-operation and one party fails to discharge its duty as a result, the party that should have co-operated but failed to do so may not be able to claim that the other party was in breach of the contract. This will affect termination rights.

The duty to act in good faith, similarly, will be assessed in accordance with the circumstances with each individual case. Courts have considered what good faith can be in different situations. This body of law is constantly evolving as new cases are brought to the Courts’ attention. Generally speaking, good faith can be described as acting fairly, not unconscionably or harshly, but these terms are also defined at law and their meaning depends on the particulars of each case. Clearly, this can be a very complex area to litigate in.

Furthermore, there may be specific implied duties that parties evidently had in mind when contracting, but were not expressly entered into the contract. Establishing them is a heavily evidence based exercise and it is important that an experienced legal professional, who is familiar with recent legal developments, assists in this process.

Employer Company Policies

An employment contract may make reference to various policies that govern the practice of the company an employee may seek to work at. These policies may also contain important provisions that add to the rights, responsibilities and duties of employees. Generally, a policy document may not be included as part of the contract itself, however it may be publically available on the company website or at its registered office. In some cases, a policy document will form part of the employment contract.  It is important not to agree to anything without first having regard to its provisions, and if there is any uncertainty, obtaining detailed legal advice on the terms of the policy and how it may affect your rights as an employee may be essential to secure your rights.

Varying an Employment Contract

A contract of employment may contain provisions relating to variation. These can address the method of variation, the time when variation is open to an employer, and any employee involvement in the variation procedure. If no such provision exists, the employer may not have a right to vary. Any attempt on his part to change the scope of the employment contract may constitute an act of repudiation giving rise to a liability. However, the employer and the employee do have the right to modify, change or amend any terms, conditions or warranties by mutual consent.

Termination

Termination can take various forms. Justified and unjustified termination will obviously give rise to different rights and liabilities between the employer and the employee. An unjustified termination is a termination based on a reason that is illegitimate, which means that the reason offered as the basis of termination does not actually permit the termination of employment. In this situation, the innocent party may be able to rescind the contract and prosecute its rights at law. Some of these rights may include claiming compensation, damages or reinstatement.

Ordinarily, a justified termination can be based on the expiry of the term of the contract of employment, completion of the tasks to be performed, dismissal or resignation, abandonment or mutual termination where the employer and the employee agree that the employment has come to an end.

If either party to an employment contract commits a serious or fundamental breach of a term of the contract of employment, the innocent party will likely have the right to terminate. However, what is in fact a fundamental or serious breach can be a matter in dispute all on its own. A determination on this point can only be made after the alleged breach is analysed in detail and in conjunction with the nature of the work to be performed. Laws exist that assist in this assessment, and an experienced employment solicitor will have to bear recent updates into consideration when providing employment legal advice.

Other Issues

Other issues that can arise in employment contract disputes can include situations where there is an allegation that only part of a contract is breached, the relationship between the rights of an employer and an employee compared to legal principles that govern employment law, the requirements of fixed term contracts, issues relating to probationary periods, the rights and liabilities of trainees, agents, and subcontractors, fidelity and indemnity bonds, and the legality of the contract itself.

These can all be very complex issues and require careful investigation of both fact and law. If you are uncertain about your rights and responsibilities under the terms of your employment contract, our employment law team at Navado can help you with your inquiry. Speak to an employment lawyer now by contacting us on (02) 9233 4048 or send an email to info@navado.com.au. For a complete of our office branches, see our Locations tab. 

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This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.

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