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Illegal employment contract provisions

July 27, 2016


HR Assured often receives questions about what to include in an employment contract. But every now and then a curveball hits: this time it was the question of “what should not be included in a contract?”

The list of inclusions is fairly standard across the various forms of employment types and industries, and involves capturing the essence of the agreement between the parties.

The list of exclusion items may even be longer than the inclusions. Nothing discriminatory, contrary to law or an applicable industrial agreement, no ambiguous, vague or contradictory clauses…there’s a lot of obstacles which need to be avoided.

Minimum obligations

An employment contract cannot provide for conditions which are less than the minimum standards set out in legislation, awards or agreements, including the National Employment Standards (“NES”). All employees are covered by the NES, regardless of whether they’ve signed a contract, are migrant workers, or are juniors, temporary or casual staff. Even attempting to exclude or avoid the NES by mutual agreement with the employee will have no effect.

Among the minimum standards in the NES are:

  • minimum notice periods
  • minimum amounts of redundancy pay
  • maximum weekly hours
  • leave entitlements
  • rules about working public holidays

Other forms of illegality

A recent example of an illegal employment contract was the one used by a well-known engineering and construction company who is one of the largest mining services providers in the world. Following a 12 month investigation into the company by the Fair Work Ombudsman, it was revealed that its employment contracts contained a provision which would allow the company to terminate the employment of its migrant workers if they “engaged in trade union activities” such as joining a union or taking part in lawful industrial action.

Such a clause is blatantly illegal, contravening protections in the Fair Work Act 2009 (Cth) and various Federal and State discrimination laws.


HR Assured always recommends having a professional draft your employment contracts, or at the very least, review your template design to identify any particular concerns or make suggestions for improved protection. Contracts are vital documents which govern the relationship between you and your employees, and having a poorly drafted contract or no contract at all may lead to protracted and costly disputes which could have been easily avoided.

For more information on employment contracts and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.