Employment contract checklist

Every small business owner knows that running a business is tough. You’ve got customers to keep happy, a team to lead and big targets to hit. And when you’re in the midst of bringing a new team member into the fold, the last thing you need is an employment contract that lets you down.

It’s the most important document between you and your employees. Think of it as your employment safety net that sets the tone of the employee/employee relationship. Get it right and you’ll avoid admin headaches, protect your bottom line and make sure everyone knows where they stand. Get it wrong and you and your new hires will feel the impact well into the future.

Whether you’re hiring your first employee or managing a growing team, this checklist will guide you through what to include, what to double-check and how to keep your contracts compliant. By taking a few extra steps now, you can feel confident that your contracts are not only legally sound but also reflect your company’s values and commitment to doing the right thing by your people.

The information in this checklist is current as at 8 October 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The content is general information only, is provided in good faith to assist employers and their employees, and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this checklist. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this checklist.

The importance of compliant employment contracts

If you’ve ever dealt with employee disputes or last-minute resignations that have come out of the blue, you know that things can get messy fast. The right contract clearly states the rules, protects your business and makes having those tough conversations a whole lot easier.

It’s also your first line of defence when it comes to meeting your legal obligations under the Fair Work Act and abiding by the National Employment Standards. If you find yourself leaving out key components of an employment contract or relying on a verbal agreement, you can run the risk of hefty fines, possible jail time and a whole lot of unnecessary stress.

What is an employment contract and why does it matter?

Like we said earlier, consider your employment contracts as the most important documents between you and your employees. It lays out exactly what’s expected of them and what they can expect in return.

For you, it’s a layer of protection for your business. It can help set clear boundaries, handle performance issues that may arise and answer any questions about entitlements and processes. When details like employee pay, leave and notice periods are laid out in a document, the chances for confusion significantly reduce.

Working with an independent contractor and not an employee? Download our independent contractor agreement.

What should be included in an employment contract?

Creating a clear, compliant employment contract is one of the most important steps in hiring a new team member. In Australia, employment contracts exist to formalise the working arrangement, while providing protections for both the employer and the employee. These protections are generally put in writing, setting out the rights, responsibilities and expectations of employment.  

Whether you’re hiring a casual hospitality worker or a senior professional, taking the time to document the right details will help you manage your compliance obligations, while creating a great onboarding experience for every new employee.

To build a robust employment contract, you need to include specific information that protects both parties. Here’s what you need to cover:

Who’s involved: Employer and employee details

List your full legal business name and your employee’s full name. It sounds basic, but mix-ups happen, especially if you run several businesses or hire family members. 

Be sure to add your business’s ABN/ACN and your main worksite address, so everyone knows exactly who’s involved.

Role and responsibilities: Job title and description

In the employment contract, write out exactly what the team member is responsible for, so there’s no awkward “I didn’t know that was part of my job” conversations later.

You want to be specific about the responsibilities of their role, pointing out all major duties and tasks unique to your business (e.g. opening up the shop, managing stock or handling client relationships). It’s also a good idea to state that the employee’s duties may be changed in the future, to give yourself a bit of flexibility.

Full-time, part-time or casual: Employment type and duration

Is your new hire a full-time, part-time or casual employee? Write it down, including their start date and, if relevant, an end date or review period. Accurately classifying each worker keeps you compliant and helps avoid confusion over penalty rates and leave.

If you’re not sure what defines a casual employee, take a look at our in-depth guide to hiring casual employees.

Modern awards: Coverage and classification level

The majority of employees in Australia are covered by an industry or occupation specific modern award.  This sets minimum terms and conditions on top of those in the Fair Work Act, most importantly the relevant minimum wage. You should inform employees in their employment if a modern award applies to them and their classification level in the award.

Pay and perks: Compensation and allowances

When it comes to pay and perks, it’s all in the details. Outline their salary or pay rate (including overtime), any allowances they’ll receive and any other compensation like bonuses. 

If your new hire is working when a penalty rate kicks (like on a weekend or public holiday), include details about them too. You want to be clear about how and when they’ll get paid, as well as include any entitlements they’re entitled to under a modern award or enterprise agreement.

When and where: Working hours and location

Every business is different, so it’s important to define the expected working hours. Are the expected hours of work 9am-5pm or are you engaging employees to work shift work?

You also need a state where your new hire will be working from. Can the role be done flexibly or is the role completely on-site? These are important details to include and set expectations from the very first day.

Leave entitlements: Annual, personal and more

Don’t leave employee leave entitlements to chance. Clearly state leave entitlements (include annual leave, sick/carer’s leave and long service leave). You may also want to include the process for how to apply for each type of leave.

 Stating the leave types employees are entitled to under the National Employment Standards (NES) gives your team confidence they’ll get what they’re owed. It also helps cover your bases when the leave requests start rolling in.

Superannuation contributions

In the employment contract, be clear that you’ll make super payments as required by law, at the correct rate, at the correct time and into the employee’s nominated fund.

Don’t get caught off guard by the changes to super. Check out our Payday Super Hub for everything you need to know about these important changes.

How to end the employment contract: Termination and notice periods

In the employment contract, include the steps an employee needs to take to end their employment. How much notice do they need to give? What’s the process for returning equipment? Make sure all of these questions are covered so there’s no confusion or offboarding grey area.

Restraint clauses: Confidentiality and non-compete 

If you want to keep your business secrets safe or prevent staff from taking clients after they leave the business, you’ll need to draft up confidentiality and non-compete clauses. There are strict guidelines on these, with potentially more changes to the law coming soon, so we suggest seeking employment advice on this (our team of HR advisors can help). 

What clauses should employers consider for employment contracts

These optional clauses can help give you peace of mind:

• Probation periods: Want to make sure the person you’ve hired is right for the job? Set a clear probation window (usually 3–6 months).
• Intellectual property rights: State that anything your employee creates for the business belongs to the business.
• Dispute resolution processes: Outline a clear process for complaints or disagreements in the workplace.

Stay across your legal obligations with our handy checklist

Managing employment is not a set and forget process. While the template you put together two years ago might seem perfect, laws are continually changing in Australia. Modern awards, enterprise agreements and the Fair Work Act set strict minimums and your contracts must always reflect the most up-to-date requirements. To ensure you’re staying across your obligations, make sure you’ve got everything in our checklist ticked off.   

Download the employment contract checklist now.