The Importance of Written Employment Contracts

29 SEP 2020

 

Whilst employment contracts may not be the most exciting part of running a business, it is a crucial component.

Getting it right can save a headache down the line.

Getting it wrong can have significant negative consequences – as a NSW Supreme Court case has recently reminded us.

NSW Supreme Court case: Roderick v Washington H Soul Pattinson & Company Limited (No 2) [2020] NSWSC 1224

Ms Roderick was employed by Washington H Soul Pattinson from 2006 until 2018, in a variety of senior executive roles. In 2015, she was provided with a draft employment contract that was never signed and finalised.

In 2018, Washington H Soul Pattinson terminated Ms Roderick without notice, claiming no employment agreement existed between the parties, and that no notice was required.

Ms Roderick filed a case in the NSW Supreme Court against her employer, Washington H Soul Pattinson.

The NSW Supreme Court disagreed with Washington H Soul Pattinson, and determined that the draft employment contract formed the basis of the employment relationship, even though it was not signed. Further, the Court ruled that Washington H Soul Pattinson was required to give Ms Roderick reasonable notice of termination.

Ms Roderick was awarded the sum of $1,105,239.50, plus legal costs, in her favour.

Take Away Message

The above case serves as a timely reminder for employers of all sizes (small, medium and large) to ensure employment contracts are drafted, finalised and signed between the relevant parties in their business. That is done to confirm the employment relationship in writing, which is best practice.

Prevention (avoiding a dispute down the line) is better than a cure (defending a case if there is ambiguity and an employee files a claim).

Employment contracts are also vital to protect an employer’s interests, such as ensuring there exists clear and unambiguous confidentiality provisions, intellectual property provisions and even restraint of trade / restraint of solicitation provisions if necessary.

Employment contracts are bespoke documents, which need to be tailored to your specific business’ model, needs and employment structure.

How can Marsdens help?

If you are looking to implement written employment contracts in your business, or to update your existing employment contracts to ensure they are compliant with the current legislation, we can assist by providing tailored advice and drafting.

If you want to have an initial discussion to see how we can assist, please contact Aaran Johnson on ajohnson@marsdens.net.au or Simon Kumar on skumar@marsdens.net.au or by phoning 02 4626 5077 to discuss your situation.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

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