The most basic source of employment terms and conditions is the contract of employment. It can be in writing, for example, by letter of offer; it can be oral; or it can be evidenced by a course of conduct. A contractual term may not be enforceable if the terms in the contract are less favourable to an employee than the terms prescribed by legislation, awards, or other industrial instruments. Employment contracts in Australia are formed using the general principles of contract law. The question of whether a person who performs work for another is an employee as opposed to an independent contractor has significant implications for the nature of the obligations which exist between the parties. Australian courts have long struggled with the distinction between the two in difficult cases, and courts will examine the entire relationship.
Employees employed under a fixed term or fixed task contract are not afforded all of the protections provided by the Fair Work Act. Although they are generally entitled to the same wages, penalties and leave as permanent employees, as employees who are employed “for a specified period of time”, they are not entitled to notice periods and are excluded from the unfair dismissal provisions of the Fair Work Act.
The Fair Work Act 2009 (Cth) does not refer to probation periods. However, an employee must have worked for the employer for at least six months before he or she is entitled to make a claim for unfair dismissal, and 12 months if the employer is a small business. An employment contract can include a probation period exceeding this period, provided it is reasonable. However, an extended probation period does not affect the employee’s statutory entitlements to protections from unfair dismissal and the contract should clearly specify the period of probation and how and when performance is to be reviewed.
The Fair Work Act 2009 (Cth) regulates the required minimum period of notice of termination which varies with the employee’s length of service. If an employee’s continuing service has been less than one year, one week of notice is sufficient. If the employee has worked between one and three years, two weeks’ notice is required. Three weeks’ notice is required if the employer has worked between three and five years, and four weeks is required if the employer has worked more than five years. If an employee is over 45 years of age and has completed at least two years’ continuous service with the employer, an additional week of notice must be given. Contractual notice periods in excess of the legislative requirements are very common in Australia, with four weeks being the most common notice period for ordinary workers.
Despite the minimum notice periods provided in the Fair Work Act 2009 (Cth), employees who have no notice period specified in their contract of employment may be entitled to what is called in Australia ‘a reasonable period of notice’. This ‘reasonable period of notice’ may be well in excess of four weeks for employees with long periods of service and where equivalent jobs are in short supply.