March 19, 2015

Template employment agreements can be an operational and administrative saviour. But if used incorrectly template materials may in fact cause practical and legal headaches for your company. Here we explore some of the most common traps.

Templates are designed as a starting point for preparation of the employment agreement

There is a misconception that using a template simply requires the completion of particulars for the prospective employee ie. name, address and position. However, a template is designed to be a starting point for preparation of an employment agreement between the company and, at the time of the preparation of the template, an unknown employee.

Therefore templates require more input than identifiers of the employee or the company risks being bound by clauses that are irrelevant and inappropriate for that particular employer-employee relationship.

Templates are only as effective as the instructions that they were prepared to fulfil

The two (2) most usual employment agreements are those that are Award-based and those that are Award-free. Templates prepared for use for one type of employment relationship are not automatically transferrable to the other. For example, Award-based templates will generally include Award offset and/or exclusion provisions whilst Award-free templates may have higher level provisions in relation to the Corporations Act and restrictive covenants.

It is not the case that superfluous clauses are simply deleted to remove the Award-based or Award-free categorisation of a template. Careful consideration is required of the template provisions to ensure that minimum conditions of any relevant Award are maintained or to ensure that an Award-free employee is not inadvertently bound by an Award which could open otherwise unavailable avenues for that employee, for example access to the unfair dismissal regime.

Templates provisions may not be binding on all employees for whom the template may be used

An example of using a template provision which may prove to be unenforceable is that of a restraint provision. As a general rule all restraint provisions are void for public policy reasons except if it can be shown in the circumstances that the drafted restraint only goes so far as is reasonably required to protect the legitimate business interests of the employer. Even for Award-free employees, whose employment agreements might both be generated from the same template, varied restraint provisions may be required to ensure enforceability.

For example, the scope of a restraint used for a Business Development Manager – while reasonable and enforceable for the Business Development Manager who will likely have significant relationships with customers, contracts and suppliers of your business – may be too wide to enforce against an Accounts Manager. Such nuances may drastically change the practical effect of enforcing the Business Development Mangers’ restraint against the Accounts Manager and vice versa.   

Our Employment Law Team

Template employment agreements are a valuable addition to the recruitment and engagement resources of your company, but are only as effective as the final product that is signed by the parties.

Our Employment Team can assist in:

  • reviewing and updating your existing template materials;
  • preparing the raft of template materials that may be required for your workforce; and/or
  • applying your template materials to the engagement of particular employees.