Posted on October 04, 2022
If you are a busy small business owner employing new staff, you might be considering downloading a free template employment contract. On face value, these template contracts seem to be a quick and easy way to onboard employees without the hassle and cost of engaging a lawyer. In acting for employers, we find that these generic employment contracts often provide a false sense of security, because they can include unlawful provisions which are unenforceable and unable to be relied on in the event of an employment dispute.
There are a number of reasons why an employment contract, or part thereof, may be invalid. These include circumstances where an employment contract:
- does not provide the minimum legal entitlements established under the National Employment Standards and any relevant industry award or enterprise agreement;
- does not clearly detail an employee’s obligations or requirements specific to their role;
- includes a mistake or false information;
- is signed under duress or undue influence; or
- includes poorly drafted restraint or non-solicitation clauses.
Restraint clauses which seek to prevent employees from working for competitors or poaching existing clients are presumed to be unfair and are often deemed unenforceable by the courts. This was confirmed in the Supreme Court of Victoria where an inaccurately drafted restraint clause meant that a senior employee was allowed to take up a position with a company’s direct competitor.[1]
To be enforceable, restraint clauses must be carefully drafted to only protect the legitimate interests of an employer and must not be unreasonable. Given that the court’s assessment also considers each employee’s individual circumstances, generic pro forma restraint clauses often fall short of the specificity threshold required by the courts.
It is always important to seek legal advice to ensure that the terms of your employment contracts are fair and enforceable. At Scanlan Carroll we take the time to understand the nuances of our client’s businesses to provide them with tailor made employment contracts specifically targeted to protecting their business interests. Don’t put your business at risk by using a template employment contract, and enjoy the piece of mind that comes with having secure and enforceable agreements with your employees in place.
[1] Just Group Limited v Peck (2016) 264 IR 425
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