QHA members who have contacted the employment relations team to discuss a staffing matter will have invariably been asked about the employment contact in place for the employee in question. There is a very good reason for this.
Every employment relationship where an employee performs work for a wage, salary or commission is underpinned by a contract of employment, whether in writing or verbally agreed to.
A contract is a legally enforceable agreement between an employer and an employee that defines the terms and conditions to which both parties must adhere.
Obviously a written contract will provide immediate and clear clarity as to the terms and conditions applying to an employment relationship. For this reason, the QHA always recommends a written contract of employment be drafted – even for casual employees. Written employment contracts provide advantages including, but not limited to:
- Clearly defined terms and conditions of employment eg. important terms such as a start date, position title, employment status, working hours;
- Details of employee duties and responsibilities – good for both employees and employers, as there is no room for confusion;
- The fact that contracts can, via reference to policies, confirm behaviour and conduct expectation; remembering that common sense ain’t always common;
- Confirming confidentiality requirements given employees are likely to come across operational and financial information that employers do not want broadcast;
- Greater certainty in the event of either party wishing to terminate employment; and
- Contracts can help employers to meet certain requirements that employers are required, by law, to confirm.
With regard to this last point, the Hospitality Industry (General) Award 2010 (‘HIGA’) requires employers to inform employees at the time of engagement whether their employment is full-time, part-time or casual (clause 10). An employment contract will help an employer to meet that obligation. Clause 27.1 requires an employer and employee to agree to an annualised salary arrangement. Again, an employment contract will help an employer to meet that obligation.
It is not essential that an employment contract be in writing, however having the terms and conditions of employment in writing is a sensible practice for most businesses and can remove any ambiguities that may arise during the employment relationship.
The Verbal Contract
Many employers do not realise that a verbal contract is as binding as a written one. Same applies if an employee has not signed their contract – the fact they are working as per the employment offer (which is in the unsigned contract) strongly implies a contract is in place.
Past practices of a verbal contract are not ideal and expose members to unnecessary risks such as disputes and underpayment claims.
Employers who do not carefully manage their employment contracts are often left exposed to unexpected claims by current or former employees – particularly when the employment relationship hits a hurdle
What Should an Employment Contract Include?
QHA’s Fact Sheet, titled Letters of Appointment, detail many of the important and essential considerations of an employment contract. This is a great Fact Sheet to refer to when drafting an employment contract for ensuring that it covers what it should.
QHA Fact Sheets can be downloaded from the QHA website, or obtained via email er@qha.org.au.
In the alternative, the QHA has template employment contracts available for purchase for a nominal fee.
Both QHA members and non-members can purchase the templates (a higher fee applies to non-members). The templates have been drafted as a best practice document and can be adapted to the specific employment circumstances.
Case Study
A member recently contacted QHA about an underpayment claim that an employee had lodged. The employee claimed they were employed as per the Food and Beverage Grade 3 classification, when the employer was paying them according to the Grade 2 classification.
The first question asked of this member was: what does the employment contract provide? The response was that no written contract existed and terms and conditions were agreed to verbally including salary and performance bonuses. No mention of classification was had at the time of engagement.
In this case, there was a need to then spend time to confirm the employment duties and responsibilities of the employee – something that the member had to do because they had a better understanding of their venue and the duties of the position. Long story short, and it was determined that the duties were consistent with a Grade 2 position, but also that on occasion, the employee was required to assist with gaming work when the gaming employee was on lunch, or was on holidays. This is where clause 25 of the HIGA came in – Higher Duties. There was a backpayment due to the employee as a result. This would have been a lot more time consuming and potentially expensive for the employer, particularly if it proceeded as a small claims matter, or the Fair Work Ombudsman was involved because the employee had maintained their position of a Grade 3 classification for their entire period of employment.
Tips for Employers
Members are encouraged to offer employees a complete and comprehensive new contract detailing all their existing contractual terms and conditions as well as new legislative arrangements.
