An employment relationship is created by entering into a contract of employment. This contract distinguishes the employer-employee relationship from other types of working relationships, eg. principal-independent contractor.

An employment contract may be by oral or written agreement, or a combination of both.  For National System Employers, the Real Estate Industry Award contains a number of provisions that require the establishment of a written contract of employment.  Notwithstanding this requirement, written contracts provide employers with greater protection against claims for breach of contract than verbal contracts.

A contract of employment requires the following:

  • an offer and acceptance of employment;
  • the parties agree to exchange something of value, such as wages for labour;
  • the parties intension to create a legal relationship;
  • the parties being legally capable of making a contract (mental disorder or intoxication restricts a person’s capacity to enter a binding contract), and;
  • that the contract is not illegal.
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