“Even small oversights in wording, outdated clauses or poor documentation can create significant legal exposure when disputes arise.”
Employment contracts are often treated as a routine administrative task. A template is pulled from the system, details are updated, signatures are collected, and everyone moves on. But when a workplace dispute arises, those same documents can quickly become one of the most important pieces of evidence in the entire employment relationship.
For HR leaders, business owners, and people managers, employment contracts are far more than onboarding paperwork. They set expectations, define obligations, and help protect both employers and employees. Yet despite their importance, contract reviews are often pushed down the priority list in favour of more immediate people matters.
As employment law continues to evolve and organisations adapt to changing workforce structures, outdated or poorly drafted contracts can create risk in places many employers do not expect. A small omission, unclear wording, or a contract that no longer reflects reality can quickly become an expensive problem.
“Even though the general protections claim failed, there was still a payment of more than $170,000.”
On a recent AU Market Update, Host Leanne Lazarus, Specialist Recruitment Manager at people2people, was joined by Jonathan Mamaril, Director at South Geldard Lawyers, to unpack why employment contracts remain one of the most overlooked risk areas for Australian employers .
At the centre of the discussion was a recent employment law case involving a senior executive redundancy. While the employee’s general protections claim was unsuccessful, the employer was still exposed to a significant financial outcome because of a simple issue in the employment contract. A termination clause included a blank notice period that had never been completed, opening the door for a claim around reasonable notice rather than relying on standard statutory minimums .
It is the kind of oversight many businesses could easily make.
Contracts are often created years earlier, adapted from templates, updated by different team members, or carried across organisational changes without a full legal review. What looks like a harmless detail can become a major liability when challenged.
One of the strongest takeaways from the conversation was the importance of ensuring contracts accurately reflect the employment relationship as it stands today, not as it looked five or ten years ago.
Long-serving employees can be a particular risk point. In many organisations, newer staff are onboarded through streamlined digital systems, while long-term employee records sit in filing cabinets, shared drives, or older systems. Promotions, salary changes, restructures, and acquisitions may have changed the practical employment relationship significantly, but the contract may never have kept pace.
And while Australian employment can technically exist without a written contract, relying on verbal or implied arrangements creates ambiguity that can be costly later. Clear written contracts help establish certainty around notice periods, confidentiality obligations, intellectual property, bonus arrangements, and termination conditions .
Template contracts can also create a false sense of security.
A document that was originally legally sound can gradually become problematic if different stakeholders make edits over time without legal oversight. Clauses may be removed, wording altered, or details left incomplete. Over time, businesses can end up relying on documents they assume are compliant when they are no longer fit for purpose.
For HR teams, this is not simply about avoiding legal disputes. It is about reducing unnecessary risk before issues emerge.
Employment contract issues do not only surface during terminations. Disputes involving pay, bonus entitlements, confidentiality, notice periods, role expectations, or employment classifications can all lead back to contractual wording.
Periods of organisational change make this even more important. Mergers, acquisitions, restructures, rapid hiring growth, and shifts between contractor and employee models can all create disconnect between operational reality and contractual documentation.
The reality is simple. If your contracts have not been reviewed in years, or if you are unsure whether they still reflect how your business operates, there may already be hidden risk sitting in your employee files.
Is it time to review your employment contracts?
- Audit all employment contract templates currently in use
- Review notice and termination clauses for accuracy and completeness
- Check long-serving employee files for outdated or missing agreements
- Review contracts after restructures, acquisitions, promotions, or major role changes
- Confirm bonus, confidentiality, restraint, and IP clauses remain relevant
- Seek legal review before issues arise, not after
