Home - Can we make an employee sign a new contract?
September 21, 2011

What happens if an existing employee refuses to sign a new contract but they continue to work?

If an existing employee refuses to sign a new contract, the employee continues to be covered by his or her previous contract and must be permitted to work (unless a it is an expired fixed-term contract and the parties act consistently with that contract to end it at the conclusion of its fixed-term).

If you threaten to terminate an employee’s employment for refusing to sign a new contract, then you may expose your business to an unfair dismissal claim or an adverse action claim under the Fair Work Act. If you are seeking to introduce new conditions adverse to the employee, it is likely they will resist signing the new contract, particularly if there is no increase in remuneration.

However, if the employee raises no objection to the terms of the new contract and accepts the benefits provided under it, it is likely that they will be treated as accepting the contract by their conduct, despite their refusal to sign it.

If you are simply issuing an updated contract based on NES and modern award conditions, no legal issue will arise if you simply recognise these new conditions despite the employee’s refusal to sign the contract.

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