Employment Contracts: Why templates can create risks for businesses
Many businesses still rely on old employment contract templates downloaded years ago or copied from previous employees. While this may seem efficient, generic contracts often create significant compliance and commercial risks.
An employment contract is not simply an administrative document. It is one of the most important tools for setting expectations, managing risk and protecting your business.
Why are generic contracts risky?
A contract should reflect:
The employee’s actual role
The applicable Modern Award
Hours of work and overtime expectations
Leave entitlements
Termination and notice requirements
Any allowances, vehicle use or salary arrangements
When contracts are copied from old templates or online sources, these details are often inaccurate or incomplete.
We regularly see situations where:
Employees are incorrectly classified under Awards
Salary clauses do not properly absorb overtime or penalties
Hours of work are unclear
Casual arrangements do not reflect the actual working relationship
Policies referenced in the contract no longer exist or are outdated
Even where the intention is good, the wording itself may not provide the protection the business expects.
Why contracts should be reviewed regularly
Employment law and Award interpretation continue to evolve. A contract prepared several years ago may no longer align with current obligations or workplace practices.
This is particularly important where:
The employee’s duties have changed
The business has grown
Salary arrangements have been introduced
Employees regularly work overtime or weekends
New policies or systems have been implemented
A contract should evolve alongside the business.
What a good employment contract should do
A properly prepared contract should:
Clearly outline the employment relationship
Reflect Award obligations correctly
Explain how the employee will be paid
Protect confidential information and business interests
Reduce uncertainty and misunderstandings
Importantly, it should also be practical and easy for employees to understand.
A practical example
We often review contracts in which businesses believe employees are covered by an annual salary arrangement, but the contract wording does not clearly address overtime, penalties, or Award reconciliation requirements.
This can create significant underpayment risk, even where the salary itself appears generous.
A properly drafted contract can significantly reduce this exposure.
Final point
Employment contracts should not be treated as “set and forget” documents. They should be reviewed periodically to ensure they continue to reflect both compliance obligations and the way the business actually operates.
If your contracts have not been reviewed recently, assess whether they remain fit for purpose.
If you would like assistance reviewing your employment contracts or preparing updated agreements tailored to your business, you can book a time to discuss your situation here:
