What is an employment contract?
An employment contract is the written agreement between you and an employer that sets out the terms of your job — your pay, your hours, your notice period, and what happens if either side wants to end the relationship. Most of it is standard boilerplate, but the clauses that vary from employer to employer are usually the ones that matter most.
It's a legally binding document from the moment you sign it, even if you never read it closely. Verbal promises made during an interview — a bonus, a start date, a review after six months — generally aren't enforceable unless they're written into the contract itself.
When you'll come across one
You'll typically receive one when you accept a new job offer, when you're promoted or have your role materially changed, when a casual or fixed-term role converts to permanent, or when an employer updates its standard terms and asks existing staff to re-sign.
It's worth reading closely every time, even if you've signed similar contracts before — small differences in wording (a broader restraint clause, a shorter notice period) can matter a lot more than they look like they do on the page.
Key terms to know
- Restraint of trade
- A clause limiting what you can do after you leave — for example, working for a competitor or contacting former clients — for a set period and geographic area. Courts will often narrow an overly broad restraint, but it can still cost you time and legal fees to challenge.
- Notice period
- How much advance warning either side must give to end the employment. Check whether your notice period and your employer's notice period are actually the same length — they're often not.
- Probation period
- An initial period (commonly three to six months) during which either side can usually end employment with shorter notice and fewer formal steps.
- Base salary vs total remuneration
- Base salary is your fixed pay. Total remuneration packages superannuation, bonuses or allowances together into one headline figure — useful for the employer's marketing, less useful for comparing your actual take-home pay.
- Termination for cause
- Conditions under which you can be dismissed immediately, without notice or severance — usually for serious misconduct. Vague or overly broad wording here is worth clarifying before you sign.
- Non-solicitation clause
- Prevents you from approaching former colleagues or clients to join you or a new employer for a period after you leave. Narrower than a full restraint of trade, but still worth noting.
- Intellectual property assignment
- States that anything you create in the course of your work belongs to the employer, not you. Standard in most contracts, but the scope (does it cover personal projects on your own time?) can vary.
- Redundancy entitlement
- What you're owed if your role is eliminated for business reasons rather than performance — separate from termination for cause, and often governed by minimum statutory entitlements as well as the contract itself.
What to check before you agree to anything
Notice period asymmetry
It's common for a contract to require four weeks' notice from you but only one or two from the employer. That's not automatically unfair, but you should know about it before you sign.
How broad the restraint of trade actually is
Look at the geographic area, the list of restricted activities, and the time period together. A restraint covering "any competing business, anywhere, for two years" reads very differently to one scoped to a specific city and six months.
Base salary buried inside a bigger number
If the offer is framed as total remuneration, find the actual base salary figure — it's what your pay rises, redundancy calculations and loan applications will usually be based on.
Unpaid trial shifts
A genuine job trial should be paid in most jurisdictions. If a contract or offer implies an unpaid "trial period" before employment formally starts, that's worth questioning directly.
Vague termination-for-cause wording
Broad phrases like "any conduct the company deems unsatisfactory" give an employer wide discretion. It's reasonable to ask for this to be tied to more specific, defined conduct.
Missing redundancy or entitlement details
If the contract is silent on redundancy, you likely still have statutory minimum entitlements — but it's worth confirming rather than assuming, especially for longer-tenure roles.
Questions worth asking first
- Is the notice period the same for both of us, and if not, why?
- What exactly does the restraint of trade clause stop me from doing, and for how long?
- What's my actual base salary, separate from the total remuneration figure?
- What would count as grounds for termination without notice?
- Is there anything discussed in the interview that isn't reflected in this contract?
Frequently asked questions
Is an employment contract legally binding once I sign it?
Generally yes. Once both parties sign, the written terms are what govern the employment relationship — which is why it's worth resolving any verbal promises or unclear terms before you sign, not after.
Can my employer change my contract after I've signed it?
Not unilaterally in most cases. Material changes to pay, hours or duties typically require your agreement, though minor administrative updates (like an updated policy handbook referenced in the contract) may not.
What happens if there's no notice period listed?
In most jurisdictions a statutory minimum notice period will still apply based on your length of service, even if the contract doesn't specify one. It's still worth asking for clarity in writing.
Do I have to sign a restraint of trade clause?
You're not obligated to accept a job offer as written — you can ask for a restraint clause to be narrowed or removed before signing. Once signed, an overly broad restraint may still be challenged, but that's a harder and more expensive path than negotiating upfront.
Is a verbal agreement enough, or do I need it in writing?
Verbal agreements can sometimes be enforceable, but they're far harder to prove and rely on. Any commitment that matters to you — salary, start date, role scope — should be reflected in the written contract.
Try it on your own document
Upload your employment contract and get this same kind of explanation, specific to what you actually signed.
Drag and drop your document here
or select a file from your device
Related guides
This guide provides general information and is not professional legal, financial or other advice specific to your situation.