Employee obligations under contracts of employment can derive from the express or implied terms of the contract, and from other sources.

Theoretically, the obligations that the contract can impose upon the employee party is limited only by reference to the requirement that the parties must not contract in a manner that is contrary to public policy, or that is otherwise contrary to law.

For most employees, the express terms of the contract will be of only minor practical significance. This is because for these employees, key issues such as rates of pay, hours, leave and other entitlements are regulated by either or both of industrial instruments (ie modern awards and enterprise agreements) and statute. The situation for professional and managerial employees may be rather different, with written contracts making more or less detailed provision in relation to most key aspects of the employment relationship.

For all employees, however, there are a number of matters that are commonly regulated primarily by means of terms implied in the contract by operation of law. These include duties imposed upon employees in relation to:

• obedience and cooperation (see Duty to comply with lawful and reasonable directions);

• care and skill, including indemnity and insurance issues (see Duty of care and skill);

• fidelity and good faith (see Non-solicitation of customers/poaching of employees);

• fidelity and Good faith: Non-disclosure/misuse of confidential information (see Fidelity and good faith: non-disclosure/misuse of confidential information);

• fidelity and good faith: non-competition & use of employees' spare time (see Non-competition/use of employees’ spare time); and

• fidelity and good faith: rights re inventions/IP (see Ownership of intellectual property created by employees).

It is, of course, open to the parties to make express provision in relation to any of these matters if they so choose. Any such express term will override an otherwise applicable implied term. However, where the parties do so, they need to be aware that the terms of their agreement will operate subject to the common law principles relating to restraint of trade. These principles proceed from the assumption that all contractual provisions that are in restraint of trade are void on grounds of public policy. However, restraints may be upheld if they can be shown to be reasonable in the public interest and in the interests of the parties. See Introduction to restraint clauses and Drafting post-employment restraints.

In addition, both employee and employer may be under a mutual obligation of trust and confidence by virtue of an implied term in the contract of employment to that effect.