Employment contract in Australia: What to include and how to write one

Published Saturday 11 July 2026

Table of contents

• What is an employment contract in Australia?
• What to include in an employment contract
• Types of employment contracts
• How to write an employment contract
• Can I use an employment contract template?
• What mistakes cause disputes?
• Simplify employment admin and payroll with Xero
• FAQs on employment contracts

Key takeaways

• Every employment contract must meet or exceed the National Employment Standards and any applicable modern award or enterprise agreement that covers the role and industry.
• Your contract should clearly define the job title, duties, location, employment type, hours, pay rate, superannuation contributions, leave entitlements, probation period, and termination notice requirements.
• Use a written employment contract template as your starting point, then tailor it to the specific role, award classification, and any business-specific policies or protections you need.
• Common mistakes like misclassifying employment types, understating award entitlements, or using outdated contract clauses can lead to costly disputes and Fair Work claims.

What is an employment contract in Australia?

An employment contract is a legally binding agreement between you and your employee that sets out the terms and conditions of their work. In Australia, every employment relationship is governed by a contract, whether it's written, verbal, or a combination of both.

Do employers have to provide a written contract?

There is no legal requirement in Australia to provide a written employment contract, but every employment relationship still has a contract in place, whether it is written, verbal, or a combination of both.

A written contract is strongly recommended because it provides clear evidence of what was agreed, reduces the risk of disputes, and makes it easier to manage performance and termination.

Even without a written contract, minimum entitlements under the National Employment Standards (NES) and any applicable modern award apply automatically by law.

Western Australian employers

Most Australian employers are covered by the national workplace relations system. However, some employers in Western Australia, particularly non-incorporated businesses, may be covered by the WA state system instead.

If you are unsure which system applies to your business, check with the Fair Work Ombudsman or the WA Industrial Relations Commission.

A written employment agreement is always recommended because it provides clarity for both parties and reduces the risk of misunderstandings or disputes. Your contract must comply with the NES, which are the minimum entitlements for all employees in Australia, and any relevant modern award or enterprise agreement that applies to the role or industry.

The contract can include additional terms that are more favourable than the NES or the award, but it can never provide less. If a contract term conflicts with the NES or an award, the more favourable term applies.

Beyond express terms you write down, Australian employment law also recognises implied terms, unwritten obligations that are assumed to exist, such as the duty to provide a safe workplace, act in good faith, and maintain confidentiality.

Understanding both express and implied terms helps you draft a contract that protects your business while meeting your legal obligations.

For more information on the hiring process and what to consider before drafting a contract, take a look at the following guide to hiring employees.

What to include in an employment contract

A compliant employment contract in Australia must cover several core areas to meet legal requirements and set clear expectations. The following sections outline what you need to include and what optional clauses can strengthen your agreement.

Must-include clauses in Australia

Every employment contract should contain these essential elements:

• Job title, duties, and location: State the employee's position, primary responsibilities, usual work location, and reporting line so there's no confusion about the role.
• Employment type and hours: Specify whether the role is full-time, part-time, casual, or fixed-term, and define ordinary hours of work, including any rostering arrangements.
• Pay and superannuation: Set the base pay rate, pay cycle (weekly, fortnightly, or monthly), and confirm superannuation contributions. Employers are required to make regular superannuation contributions for their eligible employees, which as of 1 July 2025 is 12% of their ordinary time earnings (OTE) for the quarter. There are also changes coming to how frequently these payments must be made; from 1 July 2026, employers must pay super guarantee for each payday. Include the award classification and any loadings, allowances, or penalty rates that apply.
• Overtime, penalties, and breaks: Outline when overtime or penalty rates apply under the relevant modern award, and confirm rest and meal break entitlements.
• Leave entitlements: Confirm annual leave, personal/carer's leave, compassionate leave, public holidays, long service leave rules, and any other leave types required by the NES or award.
• Probation period: State the length of the probationary period (commonly three to six months) and explain how performance will be reviewed during this time.
• Termination and notice periods: Set out the notice period required by either party to end the contract, and clarify when summary dismissal may apply for serious misconduct.
• Workplace policies: Reference your business policies on conduct, work health and safety, IT use, privacy, and any other relevant workplace rules.

These clauses form the foundation of a compliant employment contract template that you can adapt for your Australian business.

Optional clauses that strengthen your contract

While not legally required, these additional terms can protect your business and clarify expectations:

• Confidentiality and intellectual property: Add clauses to protect sensitive business information and confirm that any work created by the employee during their employment belongs to the business.
• Restraint of trade: Include reasonable post-employment restraints (non-compete or non-solicitation clauses) tailored to the role's scope, geography, and duration. These must be reasonable to be enforceable.
• Location and flexibility terms: Define requirements for remote work, hybrid arrangements, or travel, and set out any flexibility or work-from-home policies.
• Tools, equipment, and expenses: Clarify who provides work tools and equipment, and outline the approval process for reimbursable expenses.
• Dispute resolution and governing law: Set out the steps for resolving disputes (such as internal grievance procedures) and confirm that the contract is governed by Australian law.
• Award coverage and classification: Note the modern award that applies and the employee's classification level to keep payroll aligned with legal entitlements.

However, fixed-term contract limits and casual conversion rules can change. Check current Fair Work guidance and consult Australian Taxation Office (ATO) resources on hiring workers before finalising a contract.

For more on distinguishing between employees and contractors, see the following guide.

Types of employment contracts

The type of employment contract you use determines pay, leave, and notice entitlements. Here's a breakdown of the main types and when to use each.

Full-time employment

There are limits on the maximum number of hours an employee can be asked to work in a week; for a full-time employee, this is capped at 38 hours, unless the additional hours are reasonable. They receive full leave entitlements, including annual leave, personal/carer's leave, and long service leave, and are entitled to notice periods if employment ends.

When to use: For ongoing roles with consistent weekly hours and where you need a stable, committed team member.

Part-time employment

Part-time employees work regular hours that are fewer than full-time hours, with agreed patterns recorded in the contract. They receive pro-rata leave entitlements based on the hours worked.

When to use: For roles that require consistent work but not full-time hours, such as administrative support or customer service positions with predictable schedules.

Casual employment and casual loading

Casual employment contracts in Australia are for roles with no guaranteed hours. For casual workers covered by the National Minimum Wage, there is an additional 25% casual loading on top of their base rate.

Casual employees generally receive this loading instead of paid leave entitlements like annual leave and personal/carer's leave. Since August 2025, casual conversion operates under the 'employee choice pathway.' Eligible casuals can notify their employer in writing that they believe they no longer meet the legal definition of a casual employee (typically after 6 months, or 12 months for small business employees), and request conversion to permanent employment.

When to use: For roles with irregular or fluctuating hours, such as retail, hospitality, or seasonal work.

Casual conversion rules and the definition of casual employment have been subject to recent changes. Check the latest Fair Work guidance to ensure your casual employment contract Australia terms are current.

For more on casual employment rights and conversion, visit the Fair Work Ombudsman.

Fixed-term contracts

Fixed-term contracts specify an end date or the completion of a project. The contract ends automatically on that date or milestone, and the employee may not be entitled to redundancy pay unless the contract states otherwise.

When to use: For project-based work, maternity leave cover, or roles with a defined duration.

For more on the benefits and considerations of contracting, take a look at the following guide to independent contracting.

How to write an employment contract

Writing an employment contract doesn't have to be complicated. Follow this simple sequence to draft a compliant agreement from start to finish.

1. Confirm award coverage and classification

Identify the correct modern award that applies to the role and determine the employee's classification level. This sets the minimum pay rate, entitlements, and conditions you must meet. Different awards apply to different industries and roles, so getting this right from the start prevents underpayment issues later.

Use the Fair Work Award Finder to check which award applies.

2. Choose the employment type

Decide whether the role is full-time, part-time, casual, or fixed-term based on the actual work patterns and business needs. This choice affects pay, leave, and notice entitlements. Consider the regularity of hours, the ongoing nature of the work, and whether you need flexibility in scheduling when making this decision.

3. Set pay and superannuation

Define the base pay rate, any loadings or allowances, penalty or overtime rules, and the pay cycle. Confirm superannuation contributions and provide the employee's super fund details or offer a choice of fund. Ensure all rates meet or exceed the minimum award rates for the classification level.

Australia has a national minimum wage that is reviewed annually, and as of 1 July 2026, it is set at $26.44 per hour or $1,004.90 per week before tax.

For more on superannuation obligations, visit the ATO superannuation for employers page.

4. Define hours and leave

Set out ordinary hours of work, rest breaks, rostering methods, and all leave entitlements in line with the National Employment Standards and the modern award. Include details about how leave is accrued, approved, and taken to avoid confusion later.

5. Add business protections

Include confidentiality clauses, intellectual property ownership terms, reasonable restraints (if applicable), and references to workplace policies. These clauses protect your business interests while ensuring they're reasonable and enforceable under Australian law.

6. Review, sign, and store

Seek legal review for higher-risk clauses or complex roles. Once finalised, have both parties sign the contract and store the signed copy securely. Align your payroll settings to the agreed terms to ensure accurate payments from day one.

For a step-by-step guide, see the following hiring employees checklist.

Can I use an employment contract template?

Yes, using an employment contract template that you can adapt for your Australian business is a practical starting point. A template provides a structured framework that covers the essential clauses, saving you time and reducing the risk of missing critical terms.

However, a template is not a one-size-fits-all solution. You must tailor it to the specific role, modern award, and your business policies. Generic templates may not reflect the latest changes to employment law, casual conversion rules, or fixed-term contract limits, so always review and update the template before use.

Sample outline to copy and adapt

Include these sections in your employment contract template to ensure nothing vital is missed:

• Parties and start date: Name the employer and employee, and confirm the commencement date.
• Position, duties, location, reporting line: Define the role, responsibilities, work location, and who the employee reports to.
• Employment type and hours: Specify full-time, part-time, casual, or fixed-term, and set ordinary hours of work.
• Pay, allowances, loadings, superannuation: State the base rate, any additional payments, and super contributions.
• Leave entitlements and public holidays: Confirm all leave types and public holiday entitlements.
• Probation period: Set the probation length and review process.
• Policies and procedures that apply: Reference workplace policies on conduct, health and safety, IT use, and privacy.
• Confidentiality and intellectual property: Protect business information and confirm ownership of work created.
• Restraint and conflict of interest: Include reasonable post-employment restraints if applicable.
• Termination and notice: Set notice periods and return of property requirements.
• Dispute resolution and governing law: Outline dispute resolution steps and confirm Australian law applies.
• Signatures: Provide space for both parties to sign and date the contract.

Take a look at the following guide for more information on drafting job descriptions.

What mistakes cause disputes?

Even well-intentioned employers can make errors that lead to disputes, underpayments, or Fair Work claims. Here are the most common mistakes to avoid when drafting or managing employment contracts in Australia:

• Misidentifying the correct award or classification. Paying below the minimum rates set by the modern award or misclassifying an employee's role can result in underpayment claims and penalties.
• Understating National Employment Standards or award entitlements. Your contract cannot provide less than the NES or the award. If it does, the employee is still entitled to the higher standard.
• Leaving part-time or casual hours, rosters, or overtime rules vague. Ambiguous terms about hours, rosters, or when overtime applies can lead to confusion and disputes over pay.
• Misclassifying an employee as an independent contractor. Treating an employee as a contractor to avoid entitlements can result in back payments, superannuation liabilities, and penalties.
• Omitting lawful termination details or including non-compliant notice provisions. Failing to set out clear, lawful termination terms or notice periods can make it harder to manage performance or end employment fairly.
• Reusing a template without updating fixed-term limits or casual conversion wording. Employment laws change. Using outdated templates can leave you exposed to claims if the contract doesn't reflect current rules.
• Keeping unsigned or outdated versions and failing to align payroll settings to the contract. Always ensure contracts are signed, stored securely, and that your payroll system reflects the agreed terms to avoid payment errors.

By avoiding these mistakes, you reduce the risk of costly disputes and create a fair, transparent working relationship.

Simplify employment admin and payroll with Xero

Managing contracts, pay, and leave is easier when your payroll and accounting sit in one place. Xero helps you track employee details, automate pay runs, and keep your records aligned with your contracts and award obligations.

Get one month free

FAQs on employment contracts

Here are quick answers to common questions Australian employers have about employment contracts.

Is a written contract required in Australia?

A written contract is not legally required, but you should always use one so your employee's pay, hours, and duties are clearly recorded. It makes it much easier for you to resolve any disputes because you can show exactly what you both agreed.

What qualifies as an employment contract?

An employment contract is any agreement with an employee about their work terms, whether written, verbal, or implied by what you both do. As an employer, you should still put key terms in writing so you can show your pay and conditions meet legal minimums.

What are the types of employment contracts?

The main types are full-time (standard weekly hours with full leave entitlements), part-time (regular fewer hours with pro-rata leave), casual (no guaranteed hours, casual loading instead of leave), and fixed-term (ends on a set date or project completion). Each type has different pay, leave, and notice rules.

What should I include for a casual contract?

A casual employment contract should state that the role is casual with no guaranteed hours, set out the casual loading rate, and explain any rostering and casual conversion rights. You should also make clear which entitlements the employee does and does not receive, such as no paid annual leave but access to unpaid parental leave and public holidays under the National Employment Standards.

Are electronic signatures valid in Australia?

Yes. Using digital documents and electronic signatures for employment contracts is becoming standard practice.