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4 things you should know about legally compliant employment contracts

Are your employment contracts out-of-date? Or worse, did you employ your staff on a handshake?

If either of these scenarios sound familiar, you will find this blog useful!

  • You’ve just employed a real asset – someone who’s a great fit for your company. There’s a mutual understanding about their employment expectations and entitlements. But nothing official (or legal) has been drawn up and signed.
  • Or, perhaps you have a staff member who’s been around for years, they signed a contract more than a decade ago and it’s been buried in your filing cabinet ever since.

What could possibly go wrong? You ask. Well, actually, a lot. So, to help you understand the importance of implementing legally compliant employment contracts, here are four things you ought to know.


Having a well written contract can avoid many disputes between employers and employees because it sets out the rights and obligations of the parties – the rules of the relationship.

A legally compliant employment contract should include things like the employee’s award, work hours, leave entitlements, remuneration, compliance with policies, duties and a job description. You might already know, there’s no legal requirement to have a job description in your employee’s contract. (And, yes, they can take a little time to pin down, which is where a HR management platform can help prepare them for you). But it’s best practice to include a job description because it forms the basis of KPIs.

Of course, like many other contracts, no-one looks at them until things go wrong. And that’s when having clauses that deal with termination of employment, protecting confidential information and intellectual property, and well drafted post-employment restraints are vital.


It’s never too late to introduce a legally compliant employment contract. The sooner you do it; the sooner you have peace of mind knowing your legal risks have been reduced if the employment ends badly.

The start of a new calendar or financial year, or when you do your pay reviews, are all great times to roll out new contracts across the board in one go.

The easiest way to implement compliant contracts is by moving to a cloud-based HR management system, which provides up-to-date and role specific contracts and job descriptions. Even better, premium services can crosscheck your staff awards to make sure your expectations and salaries are industry standard.


Workplace laws are often changing, says Dan Feldman managing partner at HR Legal. So, it’s wise to have a HR management system that automatically alerts you to legislation changes that might affect your employment contracts, policies and procedures.

“If you have a dispute with an employee and their contract was drawn up 10 years ago for example, the contract could be based on outdated legislative requirements, not the requirements of today… clauses may not be compliant anymore and some of the provisions could be void.”


Employment can always end sourly, for a whole raft of reasons, and you can easily wind up in a costly legal battle. Disputes can range from issues around providing entitlements below current statutory minimums, bullying, discrimination, failure to provide reasonable notice – the list goes on. If you come before the Fair Work Commission, your legal risks increase if you can’t produce a legally compliant employment contract that set out the terms and conditions of employment, and was agreed to by you and the employee.


DiffuzeHR is transforming the way SMEs approach HR by giving them access to an easy-to-use, cloud-based system (and the smarts) to systemize and simplify, ramp professionalism, and gain proactive control. DiffuzeHR helps SMEs by allowing them to minimise risks, reduce legal fees, decrease time spent on admin, attract and retain staff, and leverage best-practice, industry-specific HR and legal expertise in a way that is simple, easy, and efficient.


To learn more about the benefits of automating HR with DiffuzeHR, please book a demo at


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Barry Lehrer

Having run my own small business for over twenty years, I understand one of the biggest challenges is protecting your business from potentially damaging personnel or HR issues. That’s why I developed Diffuze.

Category: HR Future, HR Legal

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