Five Good Reasons To Review Your Contracts of Employment
The pace of change in employment laws in 2023 was remarkable and the most significant in over a decade. Given the impact on employers and employees, having contemporary contracts of employment is not only a compliance issue and good business practice but it is a valuable investment in maintaining good workplace relations.
So, what are some of the reasons why you should be reviewing your contracts heading into 2024?
1. Pay Secrecy Terms
The Pay Secrecy legislation that came into effect on 7 December 2022 prohibited employers from including pay secrecy terms in new contracts of employment and prohibited employers from enforcing contracts that included pay secrecy terms in existing employment contracts.
From 7 June 2023, pay secrecy terms could no longer be included in employment contracts at all, including those contracts agreed to before 7 December, 2022.
If you have not updated your contracts to remove any reference to pay secrecy terms then now is a good time to do so because employers who have employment contracts that still contain pay secrecy clauses are exposed to significant penalties.
2. Fixed-Term Contracts
New limitations on fixed term contracts came into effect on 6 December 2023, under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022.
To comply with new laws have you:
- reviewed your fixed term contracts of employment and identified those employees currently on fixed term contracts to determine how they are impacted by the new requirements or whether they are exempt from the limitations due to one of the prescribed exemptions?;
- converted fixed term contract employees to permanent contracts where their fixed term has expired or is about to expire?; and
- begun issuing the new Fixed Term Contract Information Statement for fixed term contract employees, the new Fair Work Information Statement to permanent full time and permanent part time employees and the new Casual Employment Information Statement for casual employees?
If not, complying with the new fixed term contracts legislation is another good reason for reviewing all your contracts of employment.
3. Workplace Surveillance
As companies continue to adapt to flexible working arrangements there is an increasing reliance on workplace surveillance and employee monitoring. Now more than ever companies are using advanced monitoring technologies such as video surveillance, computer tracking, telephone and email monitoring and GPS tracking.
Companies can monitor their employees where it is reasonable and necessary to protect legitimate business interests which include measuring productivity, protecting intellectual property and sensitive business information, promoting cybersecurity and detecting theft, but these legitimate actions must comply with laws which afford employees certain rights regarding privacy.
- Any data collected by an employer through the surveillance of employees is considered personal information and employers have a number of obligations regarding the treatment of personal information of employees but what must come before surveillance begins is employee consent and notifying employees that there is surveillance in their workplace.
- Notification of surveillance can be achieved through clear policies, or workplace agreements but by having a workplace surveillance clause in your employment contracts, consent is secured and on record, so perhaps consider updating your contracts to include a Workplace Surveillance clause.
4. Post Employment Restrictive Covenants
Non-Compete and Non-Solicitation clauses are a common feature in many contracts of employment but a poorly constructed and poorly written covenant is highly likely to be unenforceable.
With post-employment restrictive covenants, each restraint must restrict an employee no more than reasonably necessary to protect the legitimate business interest of the employer and what is reasonable, will be fact, jurisdiction and time specific. The reasonableness of Non-Compete and Non-Solicitation clauses will need to consider amongst other things:
- the type of business or industry the employer operates in;
- the work duties performed by the employee;
- the seniority of the employee;
- the level of employee knowledge of company information;
- the nature of the relationships the employee had with colleagues and clients;
- whether the company has a gardening leave policy or clause in its contracts;
- the likely impact of a breach of a restraint on a business interest;
- the duration of the restraint period; and
- the geographical restraint area.
If you intend to review the Non-Compete and Non-Solicitation clauses in your contracts don’t forget to take a look at those employees who have had a change in their circumstance, such as promotion or a move to a new function, as they may need a different restrictive covenant.
5. Wage Theft Laws
The proliferation of underpayment of wages cases in recent years, resulting in multiple high-profile companies entering into Enforceable Undertakings with the Fair Work Ombudsman, along with Wage Theft Laws being introduced into Victoria and Queensland in recent years, has been reinforced by the Federal Government’s Fair Work Legislation Amendment (Closing Loopholes) Act 2023.
From 1 January 2025, new wage theft provisions will criminalise intentional wage underpayments and a failure to pay superannuation. Penalties for such offences may include up to 10 years imprisonment and/or fines of up to $1,565,000.00 for individuals or up to $7,825,000.00 for companies.
Given the new laws on wage theft now is the time to check that your contracts of employment:
- Identify the relevant industrial instrument and the appropriate Modern Award;
- Identify the relevant Job Classification and Level in any Award;
- Contain Set Off clauses that are appropriately drafted for salaried employees; and
- Comply with all obligations in relation to minimum rates of pay, National Employee Standards and Superannuation Legislation.