Letters of Offer

If the position to be filled is a non-managerial, or a junior managerial position, it is generally appropriate to send a “letter of offer of employment” to the prospective employee. The letter should confirm the nature of the position, the hours of work, commencement times and remuneration offered, the relevant reporting structure and establish a probationary period. Generally other “Standard Conditions of Employment” should be attached. These should deal with compliance with the employer’s employment policies and procedures and variations to them, leave entitlements, confidentiality, performance and termination of employment. It is important that the letter be welcoming and establish that one of the criteria for the position is flexibility.

IN ALL CASES THE PROPOSED TERMS OF A LETTER OF OFFER AND/OR STANDARD CONDITIONS OF EMPLOYMENT SHOULD BE CAREFULLY CHECKED AGAINST ANY RELEVANT AWARD OR ENTERPRISE AGREEMENT.

Formal Contracts of Employment

For managerial positions, particularly those involving senior managers, a formal “Contract of Employment” may be appropriate. It should also contain many of the matters raised in a “letter of offer of employment” and the “Standard Conditions of Employment” referred to above, but it should focus upon issues of performance management and leadership obligations. It may also set out bonus and other reward based remuneration schemes. There may be a dispute resolution clause.

Irrespective of which form of documentation is utilised by an organisation, a few comments on particular types of clauses used therein is appropriate. Please note that it is not possible to comment on each and every clause contained in the documents.

Probationary periods

This clause is important as a properly constituted probationary period can exclude the newly appointed employee from taking some forms of unfair dismissal proceedings.

However, the probationary period MUST be:

• determined in advance; and
• reasonable.

If the employee has already been offered and has accepted the position, then a letter “confirming” as opposed to “offering” employment will create a post-contractual term. The probationary period will fail.

Note that in Queensland, the Industrial Relations Act 1999 imposes an automatic three month probationary period for all employees, during which time probationary employees are excluded from dismissal provisions. However, this probationary period exclusion will not apply were an employee is dismissed for an invalid reason, for example, discrimination. A longer probationary period can be agreed between an employer and employee prior to the commencement of employment, if the nature and circumstances of the work warrant it. This longer period must be reasonable, and must be agreed to in writing by the parties.

Indefinite employment or fixed term contracts?

Most employment positions are for indefinite periods. That is why it is important to clearly establish the terms upon which either party may terminate the employment.

However, some employers only required fixed term service. For example, to replace an employee who is on parental leave. In such cases, it is possible to create a fixed term position. The employer should diary forward the termination date and remind the employee beforehand that the employment will soon come to an end. If an employee continues past the agreed termination date, the Industrial Relations Commissions have often decided that their employment has become permanent.

Notice and termination clauses

While most Awards and many Enterprise Agreements deal with how the employment may be terminated, it is important to confirm those provisions and sometimes to extend them, especially to cases involving summary dismissal.

As many management positions are “Award-free”, it is imperative to set out appropriate notice periods. Note that in some jurisdictions, an Industrial Relations Commission has the power to override a notice period which the Commission deems harsh or unfair.

ALWAYS TAKE LEGAL ADVICE BEFORE SEEKING TO TERMINATE AN EMPLOYEE’S EMPLOYMENT.

Restraints of trade clauses

These clauses restrict employees after they leave their current employment. They generally protect an employer’s current client base and or employees from being accessed by a departing employee.

The Common Law Courts (and in some jurisdictions, an Industrial Relations Commission) has power to declare a Restraint of Trade invalid or to reduce it.

To be effective, a restraint of trade must be fair and reasonable with respect to the employment activity which is restrained, time and geographical application.

For example, it would be unfair to restrain a workplace relations solicitor from engaging in conveyancing once he left the current employment. It would also be unfair to stop Australia wide employment for one or two years.

However, it may be fair to restrain workplace relations employment involving current clients for three months and within 40 kilometres from the Brisbane GPO. It is a question of fact in each case.

Many employees these days refuse to sign Contracts of Employment which contain long periods of restraint.

Conflict with Awards and or Employment Policies and Procedures.

As discussed, an Award will always override inconsistent provisions in letters offering employment or formal Contracts of Employment when those provisions contain less beneficial terms and conditions.

In the same way, statutes will override inconsistent provisions in both Awards and in letters offering employment or formal Contracts of Employment, when those provisions contain less beneficial terms and conditions.

After an employee has commenced work, it is possible that the employer may change or add to its suite of Employment Policies and Procedures. In such cases, what has precedent, the Employment Policies and Procedures or the letters offering employment or formal Contracts of Employment?

Arguably, the terms and conditions in any specific arrangement between the parties should have precedent over any general Employment Policies and Procedures.

If this situation is not appropriate, obtain legal advice before altering the clauses.

Updating current employee's terms of employment.

One of the great difficulties facing employers is how to update terms and conditions of employment contained in letters of offer or formal Contracts of Employment.

Clearly, the same can be updated by agreement between the parties.

In some instances, new or updated Employment Policies and Procedures can be utilised.

Many employers, when providing bonuses or salary increases, will use the opportunity to update terms and conditions of employment by making the increase contingent upon the signing of fresh terms and conditions.

A new letter of offer or formal Contracts of Employment should be used every time an employee seeks promotion.

Other documentation that should be in place.

The employment relationship creates many obligations upon employers. To assist in managing those obligations, employers should ensure employee compliance by having a range of Employment Policies and Procedures. For example, it may be appropriate to have Policies and/or Procedures dealing with:

• Occupational Health & Safety;
• Rehabilitation;
• Induction;
• Counselling and Discipline;
• Anti-sexual Harassment;
• Anti-discrimination;
• Workplace Grievances;
• E-mail use and abuse;
• Mobile telephone use and abuse;
• Motor Vehicle Use and loss of Drivers’ Licences.

The range of necessary Employment Policies and Procedures will vary according to the work undertaken by the employer.

FURTHER INFORMATION

This Information Outline is provided courtesy of Hall Payne Lawyers who are experienced in this area of law. They are located at Level 9, 344 Queen Street, Brisbane, QLD 4000 or call them on (07) 3221-2044 if you would like more information on this legal topic, or you wish to obtain formal advice regarding your situation.

Hall Payne Lawyers are an established Queensland firm practicing in the areas of employment law (unfair dismissal etc), accident compensation (WorkCover, motor vehicle accident, personal injuries), anti-discrimination & harassment, consumer law, family law, wills & estates, criminal law and conveyancing. Hall Payne Lawyers are a founding member of the Australia-wide PeopleLaw group.