Creating an employment contract for new hires is one of the most time-consuming aspects of the HR function. The conditions of employment for new employment contracts is a maze of law and compliance.
The Fair Work Australia website has 9 employment contract templates for new staff. There are also 5 for pay slips and record-keeping, 5 for hours of work, 7 for work and family, 5 for managing performance, 6 for managing underperformance and 3 for ending employment.
Managing 40 different employment contracts can be a nightmare! To make things easier for you, we’ve broken the process of creating an employment contract template down to the basics. Whether you’re a season HR Pro or you’ve never sent an employment contract before, this is the guide for you.
Here are 7 steps you can take to easily create an employment contract template:
1. Decide on the type of employment contract you’re creating.
a) You have three broad employment contracts to pick from:
- Full Time
On top of this, each contract can either be for a fixed term or project (eg. a ‘contractor’) or on an ongoing basis.
This will be decided by the nature of the work. Factors such as hours of work available, minimum entitlements to the employee and obligations to the employer influence the employment contract.
b) At minimum, you will have to decide on these entitlements:
- hours of work
- shift penalties
- leave entitlements and
- notice of termination.
The changes will be based on whether the employment contract is full-time, part-time or casual.
You can now create your letter of engagement.
2. Craft your letter of engagement
a) Download the template
Creating letters of engagement can be time-consuming at best, and frustrating at worst. Using templates is a great way to save time on letters of engagement.
Your letter of engagement must address all the criteria listed above. Your new hire must be aware of all the entitlements in their employment contract before they can accept the offer.
The Fair Work Australia template is a great place to start.
You can have a template for each type of employment contract, or each function of your business.
b) Change these fields in the Fair Work Australia template:
All the fields you need to change are highlighted in red. Drop the entitlements into the template and you’re ready to go!
- the letterhead
- position title
- employer name
- award name
- enterprise agreement name
- hourly rate
- weekly/fortnightly/monthly income
- your contact name
- your phone number
Much easier than writing a letter of engagement from scratch.
Now you can send your letter of engagement to your new hire. From there, you just need to wait for the new hire to receive the letter, give them time to decide on the offer and wait for them to send it back.
While you’re waiting, you can create a new hire checklist.
Download the Letter Of Engagement template
3. Draft the hours of work agreement
An Hours of Work agreement is essential for part-time employment contracts. Have your new hire fill out their name, position, agreed hours, breaks and total hours.
The new employee and their manager need to sign off on this agreement to start the employment contract.
There are still 3 steps in this list. HR needs to have every part of an employment contract prepared for new and existing employees.
Example: Hours of Work Agreement
4. Create an induction program and onboarding checklist
Make sure your induction program matches up with the ‘starting a new job’ checklist for the new hire. Having these two forms work together is the secret to a great experience on a new hire’s first day.
Both forms should include where new employees need to go on their first day, what time they start and who they need to report to.
Remind them to bring their employment contract, tax file number declaration form, and superannuation choice form. They’ll need additional information such as bank account details, licenses, proof of age, qualifications and emergency contact details.
We’ve created a handy new employee onboarding checklist that you can download free to help get you started
5. Prepare variations of the employment contract template
Employee working situations change over time. Prepared HR departments will have employment contracts for all occasions. Be sure to have your roster forms, timesheet templates, full-time hours of work variation forms and part-time variation employment contracts ready.
Forms similar to the hours of work agreement mentioned above can be used here. A similar process needs to be followed too: have the employee write down their change in hours, have them and their manager sign off on the new agreement, have the signed and filled out form sent back to HR and implement the changes into the system.
All that’s left is to prepare offboarding process for leaving employees.
6. Prepare a termination of employment letter for any leaving employees.
There’s a number of termination letters you need to have prepared. The Fair Work Australia website has templates for leaving employees, serious misconduct and redundancy.
Notice needs to be given for compliant termination, whether the decision is being made by the employer or the employee.
The reason for the termination must be provided. Previous written warnings must be included if the termination is for unsatisfactory performance.
Similar to the original letter of engagement, a termination letter must include similar information. A termination letter must also include meeting conducted prior to termination, names of others at the meetings, advice given to the employee, number of official warnings, dates of warnings, reasons for termination, notice period and date of termination of employment.
A prepared HR department will have all of these forms ready for new employees. These documents prepare HR for every part of the employment lifecycle.
Managing up to 40 documents can be difficult. That’s why an automation system makes onboarding and offboarding new employees so much easier.
7. Manage your employment contract templates in the cloud for faster employee onboarding.
Paperless Onboarding Software such as HROnboard manages all of these steps for you.
Condense these 40 forms down to one template that you can fill out with fields and checkboxes. Email forms to new employees and have new employees to email completed forms back.
The relevant departments can be notified of new hires. This allows other departments to prepare induction programs and uniforms. Forms such as tax file declarations and superannuation can be completed online before the new hire’s first day. This makes new hires feel like a productive part of the team on their first day.
Changes to employment contracts can be emailed and completed online. A change in hours or even a shift from part-time to full-time can be completed electronically in a paperless system.
Employment contracts can be stored online. Both employers and employees can login to their own portals to review their offers at any time.