Employment Contracts: What to Include (and What's Illegal)
A good Australian employment contract covers the job, the employment type, hours, pay and the award it's measured against, probation, notice, leave, confidentiality, intellectual property and your workplace policies, and it says nothing that undercuts the National Employment Standards or the award, because those clauses are void anyway. The award sets the floor; the contract records the deal you've struck above it.
Why you need a written contract even when an award applies
If you never wrote a contract down, you still have one: a verbal contract made up of the job ad, the interview, the offer email and whatever's happened since. That's a bad position to argue from.
The award doesn't fill the gap. It sets minimum pay and conditions for a type of work. It doesn't say what this person's job is, whether they're casual or full-time, how their salary absorbs overtime, or what notice you've agreed beyond the minimum. If you're not sure which award applies, start with our guide to finding your employee's award, because the contract has to reference it.
Get the contract signed before day one, alongside the other steps in our hiring your first employee checklist.
The essential clauses
| Clause | What to cover | Common mistake |
|---|---|---|
| Parties and start date | Legal employer name and ABN, employee name, start date | Naming the trading name, not the employing entity |
| Position and duties | Title, reporting line, brief duties, "other duties reasonably directed" | A duties list so specific every change looks like a variation |
| Employment type | Full-time, part-time, casual or fixed-term | Calling someone casual when their hours are fixed and ongoing |
| Hours and location | Ordinary hours, days, place of work, reasonable additional hours | No agreed hours pattern for a part-timer |
| Pay and award | Rate or salary, award and classification, pay frequency, super, set-off | Salary with no set-off clause |
| Probation | Length, review points, notice during probation | Treating it as a shield against unfair dismissal claims |
| Notice | Notice each side gives, payment in lieu | Notice below the NES minimum |
| Leave | Reference to NES and award entitlements | Restating figures that go stale |
| Confidentiality | What's confidential, obligations during and after employment | Defining it so broadly it catches general skills |
| Intellectual property | Assignment of IP created in the job, moral rights consent | No IP clause in a business that creates content, code or designs |
| Policies | Policies apply and can change, but aren't contractual terms | Making the whole handbook binding on you |
| Deductions | Agreed deductions, in writing, mainly for the employee's benefit | Blanket clauses for breakages or till shortfalls |
| Termination and property | Summary dismissal grounds, return of devices and data, entire agreement | Old offer emails left alive as competing terms |
Employment type
Casuals get the award's casual loading (25% under most awards) instead of paid leave, and the contract should say so. Fixed-term contracts made on or after 6 December 2023 can't run more than two years including extensions, can't have more than one renewal, and can't be rolled over for the same work; break those rules and the end date stops applying. Our guide to casual vs part-time vs full-time employment explains the differences.
Pay and the award reference
Name the award and classification, state the rate or salary and confirm it's at or above the award minimum. From 1 July 2026 the national minimum wage is $26.44 an hour or $1,004.90 a week, and award minimums rose 4.75% from the first full pay period on or after that date (as at September 2026). See our guide to minimum wage and penalty rates for 2026-27.
If you pay a salary to an award-covered employee, include a set-off clause saying the salary covers all award entitlements including overtime, penalties, allowances and loadings. Without it, those amounts are owed on top. Even so, check yearly that it still covers the hours actually worked.
Super is 12% of ordinary time earnings on top of wages, and from 1 July 2026 it must reach the fund within seven business days of pay day under payday super.
Probation
Three to six months is standard. The unfair dismissal minimum employment period is six months, or 12 months for an employer with fewer than 15 employees, and it's set by the Fair Work Act, not your contract. A three-month probation clause doesn't let you dismiss without a fair reason, and general protections and discrimination laws apply from day one.
Notice of termination
You can agree to more notice than the law requires. You can't agree to less. The NES minimums step up with service: one week for a year or less, two weeks past one year, three weeks past three years and four weeks past five, plus an extra week for employees over 45 with at least two years' service. Casuals and employees dismissed for serious misconduct aren't entitled to notice. In the contract, make notice mutual; most awards let you deduct up to a week's wages if an employee leaves without giving it.
Confidentiality, IP and policies
Confidentiality should cover client lists, pricing, supplier terms and financials, and survive the end of employment. The IP clause should assign to the business everything created in the course of the job and include moral rights consent.
Policies belong in a separate handbook. The contract should say the employee must comply with policies as varied from time to time, and that policies aren't part of the contract, so you can update them without renegotiating and a missed step in your own disciplinary policy doesn't become a breach of contract.
What you can't contract out of
Some of these clauses are void, meaning they have no effect. Others attract penalties as well.
The National Employment Standards. Twelve minimum entitlements apply to every national system employee and no contract can reduce them: maximum weekly hours (38 plus reasonable additional hours), requests for flexible working arrangements, casual employment rights, parental leave, annual leave, personal/carer's leave with compassionate and family and domestic violence leave, community service leave, long service leave, public holidays, superannuation contributions, notice of termination and redundancy pay, and the Fair Work Information Statement and Casual Employment Information Statement.
Award minimums. Any rate, loading, penalty or allowance below the award is an underpayment even if the employee agreed in writing.
Pay secrecy clauses. Terms stopping employees discussing their pay have had no effect since 7 December 2022 and have been banned in new contracts since 7 June 2023.
Deductions and cashbacks. You can only deduct from pay if the employee genuinely agrees in writing and the deduction is mainly for their benefit, or an award, agreement or law authorises it. A clause authorising a deduction that benefits you and is unreasonable has no effect. Requiring an employee to hand wages back is treated the same way.
Mislabelling. Calling a permanent worker casual, or an employee a contractor, doesn't make it so. Since 26 August 2024 casual status turns on the real absence of a firm advance commitment to ongoing work, and casuals can give notice to move to permanent employment after six months (12 months with a small business employer).
Information statements. Give every new employee the Fair Work Information Statement, casuals the Casual Employment Information Statement (again after 12 months for small business employers; at 6 months, 12 months and every 12 months for others), and fixed-term employees the Fixed Term Contract Information Statement.
Contracting out of unfair dismissal. You can't. Probation, fixed terms and "at-will" language borrowed from American templates don't remove Fair Work Act protections.
Courts can order penalties per contravention of up to $21,840 for an individual, $109,200 for a company with fewer than 15 employees, and $546,000 (or three times the underpayment, if greater) for larger companies, and ten times those amounts for serious contraventions, based on the $364 penalty unit from 1 July 2026 (as at September 2026).
Restraint of trade: what actually holds up
A restraint stops a former employee competing with you, poaching clients or recruiting staff for a period after they leave. Courts start from the position that restraints are void, and only enforce one that protects a legitimate business interest (confidential information, customer connections, workforce stability) and goes no further than reasonably necessary in duration, geography and activity.
In practice, a 12-month Australia-wide non-compete on an award-wage employee is very unlikely to survive, while a six-month clause stopping a senior account manager soliciting the clients they personally handled usually will. Non-solicitation and confidentiality clauses do most of the useful work for a small business; non-competes are mostly a deterrent.
The law is also changing. In the March 2025 federal Budget the government announced a ban on non-compete clauses for employees earning under the Fair Work high-income threshold, which is $190,100 for 2026-27 (as at September 2026), with a planned start in 2027. The announced ban excludes sale-of-business restraints and doesn't cover non-solicitation or confidentiality clauses. Check the current status on treasury.gov.au before relying on a non-compete, and draft on the assumption that non-solicitation and confidentiality will be your enforceable protections.
Free templates and when to pay a lawyer
The Employment Contract Tool on business.gov.au, developed with the Fair Work Ombudsman, builds a basic written contract for award-covered full-time, part-time and casual employees. Check its eligibility questions first. The Fair Work Ombudsman also publishes free template letters for probation outcomes, warnings and flexible working requests, plus the three information statements.
That's enough for a standard hire. Pay for advice when the role involves a restraint you'd actually want to enforce, commission or bonus schemes, equity, an award-free or high-income employee, or a fixed term you're not sure fits the exceptions. Our overview of the business contracts small businesses actually need puts employment contracts alongside contractor agreements.
Updating contracts
A contract is varied by agreement, not by memo. You can't unilaterally cut hours, change duties materially or add a restraint; you need the employee's agreement, and for significant changes a signed variation letter or a fresh contract at promotion time.
Review contracts each 1 July, when minimum wages, award rates, the high-income threshold and often the law itself change. Recent triggers: the right to disconnect applying to small business employers from 26 August 2025, payday super from 1 July 2026, and the non-compete ban if it commences in 2027. Also revisit casuals who've settled into regular hours and salaried staff whose hours have outgrown the salary.
Key takeaways
- Put every employee on a written contract that names the award and classification, states the pay and includes a set-off clause if you pay a salary.
- Nothing can go below the 12 National Employment Standards or the award; pay secrecy clauses, unreasonable deductions, mislabelled casuals and fixed terms over two years are void or penalised.
- Probation doesn't shorten the six-month (or 12-month small business) minimum employment period for unfair dismissal.
- Non-competes are rarely enforceable for small business roles and face a planned ban for employees under $190,100 from 2027; rely on non-solicitation and confidentiality instead.
- Use the free Employment Contract Tool for standard hires and review contracts every 1 July.
Where to get help
- Fair Work Ombudsman: employment contracts for the NES, information statements and templates, or call 13 13 94
- business.gov.au, home of the Employment Contract Tool
- Fair Work Commission for the high-income threshold and wage decisions
- Treasury for the status of the non-compete reforms
- An employment lawyer or HR adviser for restraints and senior roles; your accountant or payroll provider for set-off checks and payday super
Frequently asked questions
Do I need a written employment contract if my employee is covered by an award?
You're not legally required to have one, but you should. The award sets minimum pay and conditions, not the specifics of your arrangement: the position, hours pattern, notice above the minimum, confidentiality, intellectual property and how a salary is set off against award entitlements. Without a written contract you still have a contract, just a verbal one that's hard to prove in a dispute.
What can't be put in an employment contract in Australia?
Anything that provides less than the National Employment Standards or the applicable award, because those terms are void even if the employee signed. Pay secrecy clauses have been banned in new contracts since 7 June 2023, deductions that mainly benefit you and are unreasonable have no effect, fixed-term contracts can't run past two years or be renewed more than once, and labelling a permanent employee as casual or a contractor doesn't change what they are.
Are non-compete clauses enforceable in Australia?
Only when a court finds them reasonable, which for most small business roles they aren't. A restraint must protect a legitimate interest such as confidential information or client relationships, and go no wider in time, area or activity than needed. Client and staff non-solicitation clauses are far more likely to hold up than a blanket ban on working for competitors. The government has also announced a ban on non-competes for employees under the high-income threshold, planned to start in 2027, so check its status first.
Can I put a six-month probation period in an employment contract?
Yes, and most contracts do, but probation is a contractual term, not a legal shield. Unfair dismissal protection starts after the statutory minimum employment period, which is six months, or 12 months if you have fewer than 15 employees, regardless of what the contract says. Probation also doesn't reduce the notice you owe under the National Employment Standards or the award.
Does Fair Work have a free employment contract template?
Yes. The Employment Contract Tool on business.gov.au was built with the Fair Work Ombudsman and produces a basic, compliant contract for award-covered full-time, part-time and casual employees. The Fair Work Ombudsman also publishes free letter templates for probation outcomes, warnings and flexible work requests, plus the information statements you must give new starters.
General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.