Employee Contract Sample: Key Clauses to Include in Australia

If you’re hiring your first team member (or growing from one employee to five, ten or more), it’s normal to go straight to Google and search for an employee contract sample.

Having a starting point can be helpful. But in Australia, employment contracts aren’t just “paperwork” - they’re a practical risk-management tool. A well-written employee contract sets expectations, helps you comply with Fair Work obligations, and gives you a clear process to follow if something goes wrong.

In this guide, we’ll walk through what a small business employee contract should include, what to watch out for when using a template, and how to build a contract that actually works for your business (not just one that looks good on paper).

What Is An Employee Contract (And Why Does A “Sample” Only Get You So Far)?

An employee contract (also called an employment agreement) is a written agreement between you (the employer) and your employee. It usually covers things like their role, pay, hours, leave, and key legal protections like confidentiality.

Many small business owners look for an employee contract sample because:

• they want to hire quickly and professionally
• they’re worried about getting the “legal wording” wrong
• they want to avoid misunderstandings and disputes later
• they want something they can reuse for future hires

All of that makes sense. The tricky part is that a generic sample can’t tell you:

• which modern award applies (if any)
• whether your employee is genuinely full-time, part-time or casual
• what minimum terms must be included (and what terms can’t be included)
• whether your “standard” clauses are enforceable for your business (especially restraints)

In other words: a sample is a starting point, not the finish line.

It’s also important to remember that your contract can’t undercut legal minimums under the Fair Work Act, a modern award, or an enterprise agreement. If a contract says something that’s less than the minimum legal entitlement, the minimum still applies (and you may still be exposed to backpay and penalties).

Employee Contract Sample: The Core Clauses To Include

If you’re building (or reviewing) an employee contract, these are the clauses we typically expect to see for Australian small businesses. Think of this as your practical checklist.

1) Parties, Start Date And Employment Type

Your contract should clearly identify:

• the legal employer (eg your company name or your name as a sole trader)
• the employee’s full legal name
• the start date
• the employment type: full-time, part-time, or casual
• the basis of engagement (ongoing/permanent or fixed-term if applicable)

This matters more than people expect. Misclassifying someone (for example, calling them “casual” but rostering them like a permanent employee) can create compliance issues, especially around leave entitlements and casual conversion rights.

2) Position Description And Reporting Lines

Include the employee’s:

• job title
• core responsibilities
• who they report to
• where they’ll work (including whether remote work is part of the role)

A short, clear position description helps you manage performance and reduce misunderstandings. It also gives you flexibility if you need to adjust tasks as your business grows - as long as changes are reasonable and align with the contract.

3) Hours Of Work And Rostering

Your employee contract sample should include clear terms about working hours, including:

• ordinary hours (eg 38 hours per week for full-time employees)
• days of work (or how rosters will be set)
• breaks (if you want to reinforce expectations, noting awards often set minimum breaks)
• what happens if additional hours are required

If your business relies on shift work, it’s worth having a consistent approach to rosters and changes. Many employers also set expectations in workplace policies, but your contract should still set the foundation.

4) Pay, Super And Any Allowances

Pay clauses should be specific and easy to follow. Your contract should state:

• base rate of pay or salary
• pay frequency (weekly, fortnightly, monthly)
• superannuation (generally paid on ordinary time earnings, subject to super law and ATO guidance)
• any loadings (eg casual loading)
• any allowances (eg travel, tools, uniform, on-call)

If you pay a salary, be cautious. Many small businesses accidentally assume “salary covers everything”, but awards can still apply, and employees may still be entitled to penalty rates, overtime, and allowances. It’s usually worth checking award coverage early.

Also note: payroll items like PAYG withholding and super can involve tax and superannuation law requirements. This article is general information only (not tax or accounting advice), so it’s a good idea to confirm your specific obligations with the ATO and/or your accountant.

5) Leave Entitlements

Depending on employment type, you may need to cover:

• annual leave
• personal/carer’s leave
• compassionate leave
• parental leave
• unpaid family and domestic violence leave
• long service leave (varies by state/territory and generally sits outside the National Employment Standards)

Most contracts don’t need to rewrite legislation. But they should clearly state that leave entitlements are provided in accordance with the National Employment Standards (and any applicable award/enterprise agreement), and then include any additional benefits you offer (like extra paid leave or leave loading).

6) Probation (If You’re Using It)

Probation is commonly included in employee contract samples, but it should be handled carefully.

Generally, probation clauses outline:

• the length of probation (often 3–6 months)
• that performance will be reviewed
• how termination might work during probation (subject to notice and legal requirements)

Probation doesn’t remove an employee’s legal protections entirely. For example, they still have general protections, and your contract still needs to align with minimum notice rules. Separately, eligibility to make an unfair dismissal claim is generally linked to the minimum employment period (not whether you label a period as “probation”).

7) Confidentiality And Intellectual Property

Even small businesses need confidentiality clauses. Your contract should set expectations around:

• customer lists and pricing
• business processes and systems
• financial information
• marketing plans and strategies

If the employee will create content, materials, designs, code or documents as part of their role, you should also include intellectual property terms so it’s clear what your business owns, and what the employee can and can’t use later.

8) Policies And Workplace Rules

Many businesses incorporate workplace policies by reference. For example, you might have policies covering:

• acceptable use of devices and systems
• workplace conduct
• leave requests
• work health and safety
• privacy and confidentiality

Your contract should clarify whether policies are binding, and that you can update them from time to time. This gives you flexibility as your team grows and your processes mature.

9) Termination And Notice

This is one of the most important parts of an employee contract sample - and one of the easiest areas to get wrong.

Your contract should cover:

• notice required by either party (not less than the legal minimum)
• whether you can make payment in lieu of notice
• final pay timing and what it includes (eg unused annual leave)
• return of company property on exit

It’s also common to include a clause about summary dismissal for serious misconduct, but it needs to be drafted carefully and used cautiously in practice.

10) Restraint Of Trade (Optional And Often Misunderstood)

Some employee contract samples include non-compete or non-solicitation restraints. These clauses try to stop an employee from:

• starting a competing business
• working for a competitor
• poaching your clients or staff

In Australia, restraints can be enforceable in limited circumstances, but only if they’re reasonable and protect a legitimate business interest.

A “one size fits all” restraint clause from a generic template is one of the fastest ways to end up with a clause that’s unenforceable - or a clause that creates employee relations issues without giving you real protection.

Common Mistakes When Using An Employee Contract Sample

Using a sample contract isn’t automatically a problem. The risks come from relying on it without tailoring it to your business and your legal obligations.

Here are common issues we see for small businesses.

The Contract Doesn’t Match The Award (Or You Haven’t Checked Award Coverage)

A big compliance trap is when the contract looks reasonable, but it doesn’t align with the employee’s applicable modern award - particularly around:

• minimum pay rates
• penalty rates
• overtime
• breaks
• allowances
• part-time minimum engagement rules

If you’re unsure whether an award applies, it’s worth checking early. It’s usually cheaper and easier to get this right upfront than to fix it after a payroll issue.

Using “Contractor” Templates For Employees (Or Vice Versa)

Sometimes businesses use the wrong template altogether. If you hire someone as an employee but give them a contractor agreement (or you treat a contractor like an employee), you can create serious problems with:

• superannuation
• leave entitlements
• PAYG withholding
• unfair dismissal risk and employment claims

Classification should be based on the real working relationship, not just what the document says.

Vague Pay Clauses (Especially For Salaried Staff)

Contracts often say things like “You will be paid a salary of $X and this covers all hours worked”. If your employee is award-covered, this can be risky if you’re not also meeting (and tracking against) award entitlements.

Clear pay terms plus good payroll practices are essential.

Overpromising (Or Including Benefits You Don’t Actually Offer)

Some employee contract samples include benefits like bonuses, commissions, training budgets, flexible work arrangements, or extra leave. If you include them in the contract, you may be legally committed to providing them.

If you want flexibility, you can structure benefits as discretionary (where appropriate) or set them out in a separate policy.

How To Tailor Your Employee Contract For Your Small Business

Once you know the core clauses, the next step is tailoring. This is where your contract becomes more than a generic employee contract sample and starts reflecting how your business actually operates.

Step 1: Confirm The Employment Type And Work Pattern

Ask yourself:

• Is this person ongoing, fixed-term, or casual?
• Will they have set days/hours (especially for part-time)?
• Will they work shifts? On weekends? Late nights?

Your contract should reflect the real arrangement, because your obligations change depending on the structure.

Step 2: Check Award Coverage (And Build The Contract Around It)

For many small businesses, a modern award applies even if you’re paying above the minimum. The contract should acknowledge and work alongside award terms (rather than accidentally contradicting them).

If you need a contract that fits your specific role and award context, using a tailored Employment Contract can be a safer way to set up your team from day one.

Step 3: Decide What You Need To Protect

Your contract can be a key protection tool. Consider what matters most in your business:

• Do employees handle sensitive customer relationships?
• Do they access pricing, marketing strategy or financials?
• Are they building systems, templates or content you’ll want to keep?

This helps you decide how strong your confidentiality, intellectual property, and restraint clauses need to be.

Step 4: Align The Contract With Your Policies And Culture

Your contract should match how you actually run your workplace. If you promote flexibility, include a clear process for requesting flexible arrangements. If you operate in a regulated environment (health, childcare, NDIS etc.), incorporate the compliance expectations into the role obligations.

For example, if employees use mobile phones on shift or handle sensitive business systems, having a clear mobile phone policy can help set consistent expectations across your team.

What Other Documents Should You Have Alongside An Employee Contract?

An employee contract is important, but it doesn’t do everything on its own. Most small businesses benefit from having a “document ecosystem” so you’re not relying on one contract to cover every scenario.

Depending on how you operate, you may also want:

• Workplace policies or a staff handbook to set day-to-day rules and processes (conduct, leave procedures, safety, devices, complaints handling)
• Privacy compliance documents if you collect personal information from staff or customers - for many businesses, a Privacy Policy is part of doing business online
• Confidentiality agreements (NDAs) for pre-employment discussions or where someone needs access before they sign an employment contract
• Clear contracting documents if you use contractors as well as employees, so you don’t blur the lines between the two

If you also sell goods or services to customers, it can help to have customer-facing terms in place too, such as Business Terms to reduce disputes and clarify payment, cancellations and service limits.

Key Takeaways

• Searching for an employee contract sample is a common first step, but templates need to be tailored to your business, the role, and any applicable modern award.
• A strong employee contract should clearly cover employment type, duties, hours, pay, leave, probation (if used), confidentiality, policies, and termination processes.
• Your contract can’t undercut minimum legal entitlements under the Fair Work Act, National Employment Standards, or applicable awards.
• Common template mistakes include misclassification (employee vs contractor), vague salary clauses, and unenforceable restraint clauses.
• Employee contracts work best when supported by aligned workplace policies and other business documents (like privacy and customer terms, where relevant).

If you’d like help preparing an employee contract for your small business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.