Latest Accounting News
Hot Issues
Estate planning considerations
5 checklists to support your business
Are you receiving Personal Services Income?
What Employment Contracts Does My Small Business Need?
The superannuation changes from 1 July
Hasty lodgers twice as likely to make mistakes, ATO warns
Landlords who ‘double dip’, fudge deductions in ATO crosshairs
Most Spoken Languages in the World
Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
Compare your business
2024 Year End Tax Planning Guide (Part 2)
ATO to crack down on rental income, WFH deductions this tax time
How to Draft a Standard Form Contract
GST, PAYG withholding a ‘significant portion’ of $50bn tax debt
ATO changes will make it harder for over 42,000 small businesses.
The Deadliest pandemics in History
Budget breakdown – Federal Government Analysis
Winners & Losers
Federal Budget 2024
2024 Year End Tax Planning Guide (Part 1)
Medicare levy surcharge OR basic health insurance ?
ATO warns of ‘serious penalties’ for unlawful tax scheme promoters
ACCC scam report
Employees taking more sick days - and it's getting worse
Foreign residents selling property in Australia
How much does negative gearing really cost – an overview and an opinion?
The Shortest-reigning Monarchs in History
FBT Reminder – Odometer Reading
ATO’s debts on hold campaign prompts new IGTO guidance
A comprehensive collection of small business benchmarks
The 2025 Financial Year tax & super changes you need to know!
Articles archive
Quarter 2 April - June 2024
Quarter 1 January - March 2024
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 2 April - June 2007
Quarter 2 April - June 2006
What Employment Contracts Does My Small Business Need?

As a small business owner, you may be looking to recruit employees in a variety of capacities and for a range of purposes.



.


 If so, you might consider the roles you would like these employees to fulfil and the contracts that will reflect these roles. Hence, this article explores key employment contracts for your small business depending on the nature of work, such as:


  • casual contracts;
  • permanent (part-time or full-time) contracts;
  • fixed-term (part-time or full-time) contracts; and
  • maximum-term (part-time or full-time) contracts.

Employee Classifications


Casual, part-time and full-time are the most common contracts for small businesses. However, depending on your nature of work, you may want to consider fixed-term or maximum-term contracts for your employees.


Casual Employees


Casual employees are those employees that you hire on an ad-hoc basis. For example, during the Christmas and New Year period, many retail stores hire casual employees to cope with increased customer sales demands. Employers typically pay casual employees an hourly rate and are not entitled to many benefits that part-time or full-time employees receive, like paid annual leave and personal/carer’s leave. 


Part-Time Employees


Part-time employees are employees who you hire to work for less than 38 hours per week. These employees are entitled to paid and long service leave under Australian law.


Full-Time Employees


Full-time employees are perhaps the most common form of employees who you hire on a permanent, maximum term or fixed term basis. Employers can generally expect their full-time employees to work for an average of 38 hours per week and are entitled to a full suite of paid leave, long service leave and other entitlements under Australian law.


Types of Employment Contracts


There are different types of employment contracts that you should consider before hiring staff.


Permanent Employment


Permanent employment refers to employees engaged on an ongoing basis until you or the employee terminate their employment. Typically, you pay permanent employees at an hourly rate or provide an annual salary. Permanent employees also receive entitlements such as:


  • annual leave;
  • personal/carer’s leave;
  • unpaid carer’s leave; and 
  • compassionate leave, amongst others. 

Fixed-Term Employment


Small businesses typically hire fixed-term employees to carry out work for a specific period. If you would like employees to carry out a specific project within an identifiable time frame, then drafting a fixed-term employment contract could be a useful option for your business.


Maximum-Term Employment


Maximum-term employees are very similar to fixed-term employees. The key difference is that you or the maximum-term employee can terminate the employment arrangement before the end date after providing notice. On the other hand, a fixed-term employee must work the entire set period of time as there is usually no option to terminate the contract before the end date for either party. 


Who is an Employee?


When investigating the type of employment contracts that your small business may require, you should understand the difference between an employee and a contractor. This is because employees and contractors receive different benefits under Fair Work legislation. Likewise, you must provide workers with their correct entitlements as their employer.


It is often hard to tell the difference between an employee and a contractor. However, a good starting point is noting that employees work in your business and are part of your business, whereas contractors run their own businesses. 


It is essential to get this classification correct and for the agreement to reflect that, especially for your small business. Recent changes in the law now emphasise that the contract between you and your worker is the most important element. Accordingly, you do not want your business to be at risk of a ‘sham contracting’ arrangement. 


Key Takeaways


When engaging workers for your small business, there are various employee classifications and kinds of contracts to note. Accordingly, these factors will influence the entitlements you legally owe your employees. You should also be aware of the differences between an employee and a contractor to avoid sham contracting arrangements.


 


 


 


Gurpreet Sandhu, Lawyer
April 26, 2023
legalvision.com.au




20th-July-2024

Liability limited by a scheme approved under Professional Standards Legislation