April 14, 2022

What to include in an employment contract

We once heard that employing staff is just like flying an aeroplane – the most dangerous time is on take off and landing. The part in the middle is generally free of problems. This is the same for staff – getting a good recruitment process, finding the right person, in the right role at the right time and setting clear expectations from the start can alleviate most issues.

Just so you don’t sue us if you end up in a conciliation hearing or in front of the commission…. here is our disclaimer for this information:  While all care has been taken in the preparation of this material, no responsibility is accepted by HR Dynamics for any errors, omissions or inaccuracies. The material provided in this resource has been prepared to provide general information only. It is not intended to be relied upon or be a substitute for legal advice. No responsibility can be accepted by the author(s) for any known or unknown consequences that may result from reliance on any information provided in this publication.

The best practice methodology to use for each new employee is as follows:

  • Determine the employment type: Casual, Part-Time or Full-Time
  • If the employee is Full-Time, determine whether you will be paying Wages or Salary
  • Determine the appropriate classification based on the qualifications, tasks and duties as detailed in the Award that describes the position
  • Using the classification, determine the minimum Award rates (excluding allowances etc.)

You will also need to determine whether any allowances are applicable, what penalties are applicable and how you will pay those, is annual leave loading included in the rate or paid separately and/or what will be included in the salary calculation. This will give you the base minimum you can pay the new employee. You can pay above this rate as much as you like, but at least you have the very base minimum.

It is important for all employees to sign the letters of engagement before (or on the day of) their commencement as it sets out the terms and conditions of employment from the outset including that the employees are being paid award rates and outlines how the employee is employed (i.e. full-time or casual).

What does it cover?

The Letter of Engagement outlines, but not limited to, the ability to conduct drug testing, what leave the employee is entitled and general provisions on WH&S, reporting lines, workplace surveillance, fit for work and use of company assets and materials.

It is really important that any rates are agreed to in writing with the Employee, as well as any changes made to Award conditions. Even if you have an employee that is on a salary, the salary must cover all Award entitlements. Please ensure that you are regularly checking that the salary paid would buy out any penalties or allowances that the Employee may be entitled to under the Award.


Please note that all modern award rates are subject to the Fair Work Commission’s annual wage review and generally increase from the first full pay period after 1 July each year. The next increase will be in July 2022.  



Casual employees are employees who do not have regular or systematic hours of work or an expectation of continuing work. A typical casual employee is employed on a daily basis when the need arises. Casual employees are paid a loading to compensate them for lack of entitlements such as annual leave, personal leave and the lack of continuity of work. Casual employees are not entitled to notice of termination or redundancy. If casual employees are rostered to work on public holidays, they are entitled to payment for that holiday.

Part Time

Part-time employees are employed for fixed hours every week and have the same entitlements as full-time employees calculated on a pro-rata basis depending on the number of hours worked. Part-time employees are also entitled to notice of termination and to redundancy pay. If public holidays fall on days usually worked, the employee is entitled to payment for that holiday.

Full Time

A full time employee is engaged on a permanent basis, for a minimum of 38 hours per week & must be paid for these hours as a minimum. They are entitled to paid leave as per the National Employment Standards; including annual leave and personal leave. A full time employee can be paid at an hourly rate, or a set salary.

Salaries Under Fair Work

An annual salary is an agreement about the amount of pay for work over a 12 month period. They are often included in employment contracts. An annual salary can’t be less than the minimum entitlements an employee is entitled to under the award or registered agreement that applies and the National Employment Standards.

If you need help creating an employment contract, feel free to reach out!

📧 hr@hrdynamics.com.au

📞 (07) 4051 7307 or 0438 735 926

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