The Unsigned Employment Contract | Binding Agreement or Meaningless Piece of Paper?
By Simon Abraham
31 January 2017
Let’s be honest – an employment agreement has two main tasks – to set out the terms and conditions of employment, and to protect the interests of the employer.
Employers prepare such documents and present them to prospective employees at the commencement of the employment relationship. So far, so good.
Then, due to poor filing, administrative oversight, forgetfulness or even due to sabotage, when the employment relationship comes to an end, there may be no record of any signed agreement.
Can an employer enforce post-contractual restraints or rely upon contractual terms if it cannot produce a signed document? Is an employee bound by the terms of an unsigned contract?
The law in Australia is that enforceability of such agreements depends upon whether a reasonable bystander would regard the conduct of the employee, including his or her failure to sign the document (including ongoing silence), as signalling to an employer that the specific terms of an offer have been accepted.
An employer that doesn’t keep a secure signed copy of employment contract exposes itself to the risk of a disgruntled employee alleging that he or she never accepted the terms of the initial offer.
Reasonable bystander tests regulate many legal relationships and an employer can still win a case without a signed document. Personally, we’d prefer our clients obtain the benefit of a written contract automatically rather than have to go to Court to fight the threshold question of whether there is a contract and what it says.
If you are an employer, the solution is simple – make sure employment contracts are signed and keep a copy of such contracts stored safely.