Agreements & Contracts

Every dairy employee has an employment contract from the moment they start work, whether or not it is written down. Putting it in writing protects both the business and the employee by making the agreed terms clear.

Common law employment contracts

A common law contract is formed when employment begins, even if only agreed verbally. The relevant award and federal or state laws apply on top of it, and the employer must comply with them.

Every employee should have a written contract, so entitlements and conditions are clear. A contract cannot include terms less favourable than the relevant award or law — if it does, those terms are unenforceable. It can, however, provide more than the minimum (over-award).

Watch out

Even without a written agreement, a binding contract still exists — based on the verbal terms, the award, and the applicable laws. Employees can claim unpaid entitlements for up to six years, and employers can face prosecution for breaches. Without a written record, over-award arrangements are hard to prove years later.

What a contract should cover

A written contract typically sets out:

  • the position, duties and reporting line,
  • the employment type — full-time, part-time or casual,
  • pay, including any agreed over-award rate, and how it is calculated,
  • hours of work and any averaging arrangement,
  • leave and notice entitlements,
  • accommodation, if it is provided as part of the package, and
  • confidentiality and any workplace policies that apply.

Awards and agreements

A contract sits within the award and agreement framework. There are two formal ways to vary award terms — an Individual Flexibility Agreement and an enterprise agreement — and both must leave the employee better off overall than the award. Enterprise agreements are approved by the Fair Work Commission. See the Awards section for Individual Flexibility Agreements and the Better Off Overall Test.

Casual employment laws have changed in recent years, including pathways for casual employees to move to permanent. See the Employees and National Employment Standards sections before drafting a casual contract.

Templates

Contract templates are available to adapt for the business and take to a legal adviser — covering federal and WA businesses, and permanent, casual, manager and annualised-salary roles. A plain-language guide, Basic Principles of Contract Law for Employers, is also available. 

Tip

Use a template as a starting draft, then have a legal adviser review it before it is signed — a contract tailored to the business and compliant with the award is far cheaper than a dispute.

Common questions

Does a dairy employee need a written employment contract?

A contract exists from the moment work starts, even verbally, so a written one is not required for a contract to exist. But a written contract is strongly recommended, so the agreed terms are clear and provable.

Can an employment contract pay less than the award?

No. Terms less favourable than the relevant award or law are unenforceable. A contract can provide more than the minimum, but never less.

How long can an employee claim unpaid entitlements?

Up to six years. That is why clear written contracts and accurate records matter — they make agreed terms provable long after the event.

What is the difference between a contract, an IFA and an enterprise agreement?

A common law contract is the individual agreement between employer and employee. An Individual Flexibility Agreement and an enterprise agreement are formal instruments that vary award terms and must pass the Better Off Overall Test. See the Awards section.