Author: Lehanne Bleumink, Gold Seal HR Services Manager.
As many of you are aware, Gold Seal has developed Common Law Employment Agreement (CL Agreement) templates so you can easily develop robust agreements for your employees. One is based on the National Employment Standards (NES) and the Banking Finance and Insurance Award 2010 (BFI Award), and the other is based on the NES and is not Award specific, this is generally used for high-income earners. There is also a casual agreement available.
These CL Agreements have been signed off by lawyers and provide the following benefits for you/your business:
- Being templates, they can be tailored for your business needs.
- They incorporate the law contained in the Fair Work Act 2009, which includes the NES.
- They are prepared with a view to standing up to challenge.
The position at law is that you can use a CL Agreement, but you are required to offer entitlements that are equal to or more generous than the NES, or applicable Award. Remember the CL Agreements provided are template documents. They must be customised for each individual employer and employee to suit the circumstances of the workplace.
In the templates, you will note that there are areas that are marked “Optional” and are in blue text. Those are areas that you may delete/include; they are drafted to give you some flexibility in the design of your employment conditions – where the law gives you flexibility. Where the law is not flexible, say in the matter of annual leave or long service leave entitlements, if you alter the documents, you may be affecting an area which is set in law. If you breach those employment conditions, you may be acting illegally, and your Employment Agreement may not withstand legal challenge.
Here are some examples of the areas that are most commonly altered or deleted:
- Leave entitlements – in particular long service leave.
- Notice periods.
- Post-employment restraint clauses.
Leave entitlements – leave entitlements are a minimum condition contained within the NES and Modern Awards. The clauses in the templates have been drafted to comply with these conditions as a minimum entitlement. By altering or deleting particular clauses does not mean the employee does not receive this minimum condition. The problem is, by altering a clause; it can contractually see them entitled to something more generous that would not apply to them otherwise.
Long service leave (LSL), for example, is extremely complicated. The wording in the template merely refers to the NES, it is important to not alter this clause. There have been numerous occasions where we have seen employers change this wording (e.g. to refer to State LSL conditions, when in fact they may not be respondent to State LSL conditions). This would mean that contractually, by making this change, an employee’s LSL entitlement may be completely different to what it should be and in fact may have them entitled to pro rata LSL on termination that they may not be entitled to otherwise.
Notice periods – the templates list the notice periods contained within the NES, these are minimum notice periods that apply. It is common in the industry to consider that if someone was to leave it would take time to replace them – so often an employer will change these notice periods to a longer period (e.g. 6 weeks or 3 months).
Remember it works both ways. If an employee resigns they are required to provide the notice period according to the employment agreement. Often when they have decided to move on, they no longer want to be there. As a result, you may suddenly have performance issues or absenteeism. On the other hand, if it is decided to terminate an employee, the notice period will also apply in this instance. Often when terminating, it is decided to pay in lieu of notice, this could leave an employer having to pay out a significant amount.
Post-employment restraints – although a Court does not want to restrict a person’s ability to earn a living, they will protect an employer’s interests where there is clear evidence of breach of reasonable provisions. A post-employment restraint will only be enforceable by a Court if it is considered reasonable and for the protection of the employer’s legitimate business interests. If it is considered too broad by the Court, it is not likely to hold up if challenged.
Restraints often involve a combination of a geographical restriction and a time restriction. Restraints which have only one combination, or which are broad are likely to be difficult to enforce. Therefore, a cascading provision will give a Court a variety of combinations of restraint to choose from. If the clause is challenged, the onus is on your business to prove the reasonableness of the restraint. The templates have been designed this way for this reason.
It is extremely important to understand there may be consequences to altering or deleting clauses as drafted in the templates. It can contractually change the employment conditions for an employee even with the slightest change. Should you require it; Gold Seal can guide you on how to tailor the CL Agreement to your needs.
The templates are available for purchase directly from the Gold Seal website.
For assistance on any of your HR/IR requirements – call Gold Seal on 03 9510 5100 or email firstname.lastname@example.org