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4 Ways an Employment Contract Can be Invalid

There are a number of ways that an employment contract can be partly or wholly invalid. This includes where the employment contract has been signed under duress, is contrary to a Modern Award, enterprise agreement or the Fair Work Act. An employment agreement may also be invalid where there is a mistake of fact or if its terms are too ambiguous and unclear.

In this article, we are going to look at each of these concepts and explain four ways an employment contract can be invalid.

It’s important for both employers and employees to understand why this may be the case. This can help to prevent and identify issues in relation to the employment relationship and the agreement.

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Author: Farrah Motley, Director of Prosper Law and an employment contract lawyer.

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An employment contract may be invalid if it has been signed under duress

An employment agreement may be invalid if an employer has subjected an employee to pressure or force to enter into the employment agreement.

Employment agreements, much like other types of contracts, must be freely signed. If a party goes against their own free will in signing the contract, this offends a basic contractual principle.

If there was no free will in signing the agreement, the contract may be invalid.

For example, this may incur in several situations. They are things like; coercing the other party to sign by influencing their decision. A more obvious and severe example is threatening physical violence.

The agreement may be invalid so long as the innocent party can prove that were under duress in signing the employment contract.

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An employment contract may be invalid if it is contrary to law

Let’s face it; you can write anything you like into a contract. But it doesn’t mean that it is enforceable. Instead, a term in an employment contract may be contrary to public policy or law. This includes Modern Awards, enterprise agreements and the Fair Work Act 2009 (Cth).

Non-compete clauses

We’ve spoken at depth about restraint of trade clauses in employment contracts here at Prosper Law. In summary, non-compete clauses are difficult to enforce. They are often invalid because they go against public policy.

Clauses such as non-compete clauses that are themselves invalid, won’t necessarily make the whole employment contract unenforceable. Instead, the contract is partly invalid and that clause will be struck out.

Agreement to pay wages that are less than set out in a Modern Award

Including clauses in employment contracts that offer to pay an employee less than they are entitled to at law is problematic. And it doesn’t matter whether it is intentional or not.

There’s been a lot of information published over the last few years about wages theft. Sometimes this happens because of a payroll error.

However, if what is stated in the employment contract is less than the minimum entitlements in a Modern Award or an enterprise agreement, that part of the employment agreement will be invalid.

An employment contract may be invalid if there is a mistake of fact

A mistake of fact is another factor that may mean that an employment agreement is invalid.

A mistake of fact is what occurs when one or both of the parties have mistaken a term that is essential to the meaning of the contract.

This is different to a mistake of law. As the saying goes, ignorance is no excuse and cannot be used to argue a contract is invalid.

An employment contract may be invalid if it is too ambiguous

A contract may be unenforceable for uncertainty. This is why it’s important to ensure that an employment contract is written by a lawyer. Because, if the terms are so unclear that they fall short of being capable of understanding, the contract may be invalid.

This might happen where the employee’s obligations are uncertain, unclear and ambiguous.

How can Prosper Law help?

Prosper Law is Australia’s online law firm. We provide legal advice to businesses and individuals across Australia. Our areas of legal practice include contracts, eCommerce, publishing, legal counsel and employment law.

If you need to talk to an employment lawyer, get in touch today.

Contact the team at Prosper Law today to discuss how we can provide you with workplace legal advice for a fixed fee or at affordable hourly rates.

Farrah Motley | Director

PROSPER LAW – Australia’s Online Law Firm

P: 1300 003 077

W: www.prosperlaw.com.au

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