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November 24, 2020

Question from Catherine Tribble ([email protected])

Can you please tell me if an employment contract that sits over an award (pays over and above Award entitlements) is termed a Common Law Contract? (employee is under High Income threshhold)

if not, what is it called?

Can you please advise what a “common law contract” is? (is it the employment contracts of those employees outside the scope of the award (ie above the high income threshhold)?

thank you kindly

Catherine Tribble

Dear Catherine,

Thank you for your query.

Every employee is party to a common law contract.  This may be in writing, oral or simply inferred from the way the parties conduct themselves.

If the parties to the contract are covered by an award or enterprise agreement, then the terms and provisions of the contract cannot undercut the award or enterprise agreement provisions.

It is common for employees who are not covered by an award or enterprise agreement to be called ‘common law contract’ employees.  This is often because their contracts are more comprehensive than award or EA covered employees.  However it is a bit of a misnomer because – as I said – every employee has a contract.

It is also risky to assume that an award does not apply to high earning employees.   If an award-covered employee earning above the threshold (currently $153,200 pa) makes a ‘guarantee of earnings’ with the employer, this can preclude application of the award to that employee – however, confusingly, the award still covers them.  To explain this, the employee party to a guarantee of earnings (which incidentally is separate and distinct from a contract) couldn’t claim an award entitlement to overtime, but they could say they are award-covered and therefore eligible to make an unfair dismissal claim.

Kind regards,

Benjamin Mann