All employees have an employment contract, which can be verbal, written or a combination of both. Many contracts of employment are purely verbal. While this does not reduce any contractual rights, it may be difficult to prove the existence of a particular term. A verbal contract may be later put into writing, for example, by a letter of confirmation sent after the verbal contract has been made.

If an employee is covered by an award or enterprise agreement, it is normal to rely on a verbal contract with a letter of confirmation, because the award or enterprise agreement usually provides details of most of the conditions of employment. However, if the employee is not covered by one of these, it is a good idea to have a written contract of employment so that the conditions of employment are recorded. The contract should cover issues such as:

The express terms of a contract of employment are those specifically agreed between the parties, whether verbally or in writing. In many cases these are few (the wage, the hours, the type of work that has to be done and where), but there are always other terms that are implied (that is, they exist without being stated or written down). These fall into two categories - those implied by law and those implied by the circumstances of a particular case. Implied terms do not apply when contradicted by an express term.

The employee must take all reasonable steps to carry out what has been promised under the contract of employment. Sometimes this is described as the duty to obey the lawful and reasonable orders of the employer, which usually means getting on with the work when there is work to be done and fitting in, as far as is reasonable, with the employer's scheme of operation.

The employee must exercise reasonable care and skill in the performance of the work; in other words, the employee has the duty to be efficient and to avoid negligence in doing their work.

The employee must do the job honestly and faithfully. This includes the duty to account for any property used and to pass on to the employer any profits made through the employment. 'Tips' received by many employees belong in law to the employer, although there may be exceptions peculiar to the custom and practice of a particular industry. However, an employer cannot force an employee to be searched unless it is expressly agreed to in the contract.

If an employer requests information about the conduct of other employees the employee may be under a duty to disclose information about conduct that falls within the range of the employee’s work activities. An employee who exercises managerial or supervisory functions may be obliged to disclose information to the employer, even if not asked, about the misconduct of other employees. So if an employee becomes aware of another employee’s damage to or theft of the employer's property, he or she must pass that information on to the employer.

While the courts are reluctant to intrude on an employee's spare time (that is, after knock-off time or prior to starting time), they have held that activities that are harmful to the employer's business (such as running a competitive business) may be incompatible with the duty to the employer. Basically, a worker should not tell others any details of the employer's profits or losses, customers, special methods or techniques used, or any information about the business that might help a competitor. Such insider knowledge is different from any skills, expertise, or general knowledge learnt or developed in the course of employment.

Some contracts of employment contain an express term preventing the employee, on leaving the employment, from entering into competition with the employer's business (restraint of trade clause). Such a term may be declared void by the courts despite this express agreement, unless it can be shown to be reasonable and not contrary to the public interest.

It is not a breach of the duty for an employee to disclose misconduct by the employer or other events that have occurred in the employment which ought to be disclosed in the public interest but, in so doing, the employee cannot also disclose the employer's trade secrets or misuse confidential information acquired in the employment. Under the Public Interest Disclosure Act 2018 (SA) (formerly the Whistleblowers Protection Act 1993 (SA)), some people who disclose information in the public interest have protection from victimisation resulting from the disclosure, although legal advice should be sought before disclosure [see ss 5 and 9]. In the case of Sutton v State of South Australia (1996) 68 SASR 13 the Supreme Court held that even the Ombudsman could be sued in the unlikely event that he or she victimised anyone for making an appropriate disclosure of public interest information. Public interest information is very broadly defined, and includes information that can be considered to be environmental and health information, or public administration information [see s 4]. An informant who is victimised can take legal action in the courts or can lodge a complaint with the Commissioner for Equal Opportunity, see discrimination.

If in the course of employment an employee creates or invents something when he or she is employed to do things of that sort, the property in the creation or invention (unless otherwise agreed) belongs to the employer, see copyright.

In some workplaces there are specific rules (often referred to as the employer’s policies) which may be handed to workers when they start their employment or sometimes they are displayed on notice boards. If before the employment contract is made the worker is given a copy of the rules and made to sign for them, or if the existence of the rules is reasonably brought to the worker's knowledge, the rules become part of the terms of the employment. If they are shown to the worker after the commencement of employment, he or she must consent to them before they become part of the contract.

As with the employee, the employer must take all reasonable steps to make it possible for the employee to carry out their part of the agreement and must not deprive the employee of the opportunity to perform the work.

The law increasingly has been suggesting that an employer does not have the right to simply have someone sitting around so long as the employer pays them. In other words, there may also be an obligation to give an employee something meaningful to do. This is still a developing area of law and if an employer has no work to provide it may lead to the employee's retrenchment.

Under the national system employers have a duty to keep employee records and to provide payslips to employees within one working day of paying the employees wages [Fair Work Act 2009 (Cth) ss 535-536 ].

Employers also have a duty to pay superannuation to almost all employees, the Australian Tax Office has a guide to assist employers know whether they must pay superannuation. Superannuation is additional to pay and is a minimum payment of 11.5% of gross income (as at 1 July 2024) [Superannuation Guarantee (Administration) Act 1992 s 19(2)].

Employers also have responsibilities to ensure safe work places - see the Handbook sections on Workplace Bullying and Safety Legislation.

Some terms are implied depending on the circumstances of the job. Some exist because they are so obvious that they go without saying, while others may be said to exist because, although they were not expressly raised at the time the contract was made, it is certain that they would have been agreed on if they had been raised. In some trades there are terms that are implied as a matter of custom, but these must be well known and accepted before they will be recognised by the courts. An example of an implied term is where an employer will pay an employee for time spent in washing or cleaning up if the work is dirty.

The meaning of a casual employee is specifically defined in the Fair Work Act 2009 (Cth).

This definition changed on 26 August 2024. If a person commenced employment as a casual employee before the change, they will stay casual under the new definition unless they move to permanent employment under Division 4A of Part 2.2 of the Fair Work Act as outlined below, or the employee accepts an alternative offer of employment on a different basis and commences work on that basis.

A person is a casual employee of an employer if [s 15A(1)]:

Whether the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work should be assessed [s 15A(2)]:

There is an exception to the above definition for employees of higher education institutions in some circumstances [s 15(4)]. An employee is not a casual employee if:

A casual employee usually works on an irregular basis and may or may not be offered work which in turn they have the option to refuse. Workplace agreements and awards often contain provision for casual employees. However, many workers are called 'casual' when in fact they are part-time or full-time employees, with an advance commitment to continuing and indefinite employment. These employees may not be true casual workers and they should seek further advice about their entitlements.

As a general guide, casual employees:

Under Division 4A of Part 2.2 of the Fair Work Act 2009 (Cth) a casual employee who believes they no longer meet the definition of a casual employee and has worked for an employer for at least 6 months (or 12 months in the case if their employee is a small business with fewer than 15 employees) may give an employer written notification to change to full time or part time employment under section 66AAB. All employers need to provide their casual employees with the Casual Employee Information Statement (including new employees) that outlines casual conversion requirements [see s 125B].

For more information about casual employment, see the Fair Work Ombudsman website.

From 6 December 2023, new rules apply under the Fair Work Act 2009 (Cth) when engaging employees on fixed term contracts. A fixed term contract is an employment contract that terminates at the end of a specific period. This can be contrasted with an employment contract that is ongoing or permanent.

Fixed Term Contract Information Statement

Employers must give every employee engaged on a new fixed term contract a Fixed Term Contract Information Statement (FTCIS) before the employee commences employment or as soon as possible following their commencement [s 333K].

The FTCIS can be downloaded from the Fair Work Ombudsman’s website here.

The FTCIS is in addition to the Fair Work Information Statement which employers must provide to all new employees. This outlines minimum workplace rights and entitlements.

Limitation on using fixed term contracts [s 333E]

Time limitation

A fixed term contract cannot be for longer than 2 years, including extensions and renewals.

Renewal limitations

A fixed term contract cannot include an option to:

Consecutive contract limitations

An employer cannot employ someone on a new fixed term contract if:

Contracts entered into before 6 December 2023

The new limitations do not apply to fixed term contracts entered into before 6 December 2023. However, contracts entered into before 6 December 2023 will be considered when applying the consecutive contract limitation for a new fixed term contract entered into on or after 6 December 2023.

Exceptions [s 333F]

The new limitations on fixed term contracts do not apply to fixed term contracts involving:

Further categories of contracts excluded from the operation of the new rules may be prescribed by regulation [s 333F(1)(i)].

Consequences of a fixed term contract failing to meet the new rules

If a contract does not meet the new limitations rules, the contract’s end date will not apply. Other terms and conditions in the contract will continue to apply [s 333G].

If an employee and an employer disagree about whether the new limitations apply to a particular contract, and they are unable to resolve the disagreement, they can take their dispute to the Fair Work Commission.

This page largely reproduces the information, except for examples and tables, provided by the Fair Work Ombudsman at www.fairwork.gov.au/newsroom/news/new-rules-for-fixed-term-contracts. © Fair Work Ombudsman www.fairwork.gov.au Information (Licenced Materials) provided by the Fair Work Ombudsman is licenced under a Creative Commons Attribution 3.0 Australia licence (Licence). You can view a copy of the Licence on the Creative Commons Australia website.