Employment + Independent Contractor Agreements
If you have employees, whether they are permanent or casual, you should have a written Employment Agreement
And if you have contractors, you should have an Independent Contractor Agreement.
Why is having written Employment or Independent Contractor Agreements in place so important for your business?
- They confirm the basis of employment – such as whether that person is casual, permanent, or an independent contractor. Having this in writing from the outset is important in confirming that person’s status within your business and their eligibility for certain entitlements.
- These agreements provide a clear outline of the position, the duties to be performed, and set out clear expectations on employee conduct. This becomes very important if you ever have any performance management issues with that particular employee, or if they’re a contractor, you feel they’re not meeting the role or duties you agreed at the outset.
- Having a written employment agreement will confirm important matters relevant to that particular employee, such as their probation period, remuneration, Award classification, and the days and hours of work expected. Again, having these matters in writing becomes extremely relevant if the employee isn’t meeting your expectations.
- Written agreements will set out an agreed process on termination of employment, or how any disciplinary action may be commenced.
- Some agreements will also stipulate the employee or contractor’s obligations as to confidentiality, and your intellectual property rights as the employer and business owner. If prepared correctly, these obligations can be imposed post-engagement and provide you with recourse to protect your business from your intellectual property, trade secrets, know-how, and client network or other staff members being taken by former employees or contractors.
- When a person has signed a written agreement containing such restraints they should be less likely to set up a competing business using all of your hard work and contacts.
For more information on how to best manage employees, and other ways Insight can help your business, visit our Blog below.
Employment + Independent Contractor Agreement FAQs
What Is The Difference Between An Employee + Contractor?
An employee is employed by a business and receives certain entitlements as part of their employment depending on whether they are employed on a permanent or casual basis.
A contractor is an independent worker who isn’t hired by the business, but is instead temporarily contracted to work on particular projects or for certain periods of time.
They are usually paid per service or period, work under their own ABN and do not receive employee entitlements like paid annual leave, personal leave or long service leave.
What Is The Difference Between A Contractor + A Subcontractor?
Contractor is the overarching term for anyone operating as an independent contractor.
Subcontractor usually refers to contractors who have been contracted by another contractor.
Sometimes the terms are used interchangeably, but all contractors, whether subcontractors or not, are contractors.
Does A Business Need Employment Agreements?
Absolutely!
Having your employment agreements in writing confirms the classification, roles and duties of the employee, their obligations to you and your expectations for their performance of the role – this is particularly important if you ever need to raise issues with an employee’s performance.
Are Independent Contractor Agreements Legally Binding?
Yes – as long as the agreement doesn’t attempt to contract out of your legal obligations.
For example, if you decide to have an Independent Contractor Agreement with a worker who is actually legally considered to be an employee.
This is why it is crucial to have a business lawyer prepare Employment Agreements or Independent Contractor Agreements for any worker you have.
Do People/Businesses I Contract Fall Under My Employment Agreement?
Only workers legally considered to be employees will fall under your employment agreements.
If you are working with other businesses, it is likely that they will need separate agreements for the particular service or goods they are providing – such as an Independent Contractors Agreement or a Service or Supply Agreement.
Can I Change An Employment Agreement At Anytime?
You can as long as you have your employees agree to any changes you propose making and you are not making your employees worse off than they were in the original employment agreement.
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