Australian employment contracts: what must be included
Reviewed by Mellow Editorial Team, HR & payroll content team
Employment contracts in Australia must include certain terms to be legally compliant, but most of what makes a contract genuinely useful goes beyond the bare minimum. Here is what employers need to cover.
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The legal baseline
Australian employment law does not require every term to be written down in a single document. Much of the framework comes from statute — the Fair Work Act 2009, Modern Awards, the National Employment Standards (NES) — and applies automatically whether or not you reference it in a contract.
That said, a written contract still matters. It records what the parties agreed to, reduces disputes, and lets you include terms (such as confidentiality or post-employment restraints) that statute does not cover.
One important rule: a contract cannot undercut the NES or any applicable Modern Award. If it does, those minimum entitlements still apply and the contract term is unenforceable. The contract can give employees more than the minimums — just not less.
This article is general information, not legal advice. For advice on your specific situation, consult an employment lawyer.
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Core terms every contract should state clearly
Names and commencement date. Identify the employer entity (the legal name, not just a trading name), the employee, their job title, and when employment begins.
Full-time, part-time or casual classification. This classification has significant downstream consequences — for leave entitlements, notice periods and casual conversion rights — so it needs to be unambiguous. For casual employees, the contract should also include the Casual Employment Information Statement, which is a separate Fair Work requirement.
Remuneration. State the base salary or hourly rate, how often it is paid and whether superannuation is included in or on top of the stated amount. From 2026, the Superannuation Guarantee rate is 12% of ordinary time earnings, paid to a complying superannuation fund of the employee's choice. Leaving this ambiguous creates disputes.
Ordinary hours of work. For full-time employees, 38 ordinary hours per week is the statutory standard. Specify those hours and, if applicable, how and when overtime applies.
Leave entitlements. The NES guarantees four weeks of paid annual leave per year for full-time employees (pro-rated for part-time). You do not need to reproduce the full NES in the contract, but it is good practice to acknowledge that leave entitlements are governed by the NES and any applicable Modern Award.
Reporting line and location. Where will the employee work, and to whom do they report? If remote or hybrid arrangements apply, say so — and consider what happens if that arrangement changes.
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Payroll-related clauses worth including
A well-drafted contract anticipates the payroll mechanics that will recur for the entire employment relationship.
PAYG withholding. Income tax is withheld from every pay run under the Pay As You Go (PAYG) system and reported to the ATO via Single Touch Payroll (STP) at each pay event. The contract does not need to explain the tax system, but it should confirm that statutory deductions will be made.
HECS/HELP repayments. If an employee has a study debt, repayments are withheld through payroll on a banded scale set by the ATO each year. Employees declare this on their Tax File Number declaration form, but it is worth noting in the contract that additional withholding may apply.
Superannuation fund choice. Employees generally have the right to nominate their preferred complying fund. Note this right in the contract and describe the process for making a choice.
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Protective clauses
These terms are not mandatory, but most employers with any sensitivity in their business will want them.
Confidentiality. Define what information is confidential and the employee's obligations during and after employment. A generic clause is better than none, but specificity is more enforceable.
Intellectual property. Where an employee creates work in the course of their duties, the contract should confirm that IP vests in the employer. Without this, the default position can be ambiguous.
Post-employment restraints. Non-compete and non-solicitation clauses are enforceable in Australia, but only to the extent they protect a legitimate business interest and are reasonable in geographic scope and duration. Courts have struck down overly broad restraints. If you include them, tailor them to the actual role — a clause copied from a senior executive's contract is unlikely to hold for a junior employee.
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What to review regularly
A contract signed at commencement can quickly fall out of step with the role. Pay rate increases, changes to super rates, role changes and new working arrangements should all prompt a written variation — ideally co-signed by both parties.
Modern Award coverage is also worth auditing periodically. Awards are updated by the Fair Work Commission, and if an employee's role falls under an award, the contract must remain compliant with any changes to that award's minimum terms.
Finally, ensure finalisation under STP occurs by 14 July each year, as this triggers the ATO's income statement process and affects your employees' ability to lodge their own tax returns accurately.
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