Top 5 Employment Contract Mistakes Employers Still Make in 2025

Employment contracts are the foundation of every workplace relationship. But in Australia, no matter how carefully they’re drafted, they must comply with the National Employment Standards (NES) in the Fair Work Act 2009 (Cth).

With recent reforms and new penalties, the risks for employers have never been higher. Here are the five most common mistakes we’re seeing in 2025.

1. Forgetting the NES is the “Floor, Not the Ceiling”

The NES sets out 11 minimum entitlements (hours, leave, notice, redundancy, information statements, etc.). Any contract clause that tries to undercut these rights is invalid. Silence isn’t safe either — the NES will automatically apply even if not written into the contract.

2. Ignoring the New Casual Conversion Rules

Since February 2025, casual employees can now initiate a request to convert to permanent employment if eligible. Employers must respond correctly and on time. Failing to do so risks disputes, penalties, and backpay claims.

3. Misusing Fixed Term Contracts

From December 2023, fixed term contracts are generally capped at two years (including extensions). Exceptions exist, but are narrow (e.g. medical research, higher education, performing arts). Employers who roll over short contracts repeatedly could trigger redundancy pay and unfair dismissal claims.

4. Overlooking the Written Contract Focus

The High Court has confirmed that the written contract is king in various cases. Courts will now look first at what’s on paper, rather than how the relationship plays out in practice (unless the contract is a sham). Poor drafting can make or break whether someone is seen as an employee, contractor, or casual.

5. Underestimating the Penalties

From January 2025, wage theft is a criminal offence. Employers who intentionally underpay staff can face fines and even jail time. Combined with civil penalties for NES breaches, the cost of non-compliance is higher than ever.

What Employers Should Do Now

• Review and update all contracts to reflect the NES and recent reforms.

• Provide the required Information Statements to new casuals and fixed-term employees.

• Check that any applicable awards or enterprise agreements are still being met.

• Get advice before engaging staff on casual, fixed-term, or contractor arrangements.

At East Legal, we help businesses stay compliant with practical, fixed-fee contract reviews. Contact us if you’d like a tailored review of your contracts and policies. Get in touch with us today!