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Overview — Formation of employment contracts
Breen Creighton, Special Adviser, Corrs Chambers Westgarth
In Australian law, contracts of employment are created in the same way as all other contracts (apart from those in relation to which there are special requirements, such as contracts for the sale of land).
This means that:
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the parties to a contract of employment must have the legal capacity to enter into contractual relations (see Capacity to enter into contracts of employment)
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the parties must have an intention to enter into legal relations (see Intention to enter legal relationships)
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there must be an offer of employment which has been accepted by the employee (see Offer and acceptance)
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valuable consideration must move between the parties, most obviously this would consist of the payment of money in exchange for the performance of work (see Consideration and certainty)
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the terms of the contract must be sufficiently certain to be capable of being given legal effect (see Consideration and certainty); and
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the contract must not be unlawful in the sense of being directed to the achievement of an unlawful purpose or to contemplate the commission of unlawful acts (see Unlawful contracts).
Practical implications
In the great majority of cases these formal requirements do not pose any great difficulty. The simple fact of an employer offering work to an individual who accepts the offer, renders service, and is paid will normally suffice to create a valid contract.
However, complications may arise in some circumstances. For example, where:
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a supposed employee is engaged in voluntary work for a charitable institution
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the circumstances of the engagement are so vague as to raise doubts about the intentions of the parties; or
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where an employer engages an employee who is an illegal immigrant.
In such circumstances, complex issues can arise in terms of the rights and duties of the putative employee, and as to potential exposures for the ‘employer’ in relation to issues such as superannuation contributions, deduction of tax, payment of legally mandated wages, workers compensation premiums, and so on.
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