Are Verbal Employment Contracts Enforceable?
The short answer
Yes. If you have agreed to work for someone verbally, or partly verbally and partly in writing, then both of you are obliged to meet the terms of the agreement. Your verbal agreement needs to meet the minimum legal requirements such as the minimum rate of pay, employer superannuation contributions and working conditions. As long as these requirements are met, then whatever you agreed to verbally forms the terms of your employment agreement.
The long answer
There are four key things that need to happen to make an agreement legally binding and enforceable. This applies to all agreements including verbal employment agreements:
- There needs to be an offer and acceptance of the offer;
- The parties to the agreement need to agree on the terms;
- The parties must intend to be legally bound by the agreement; and
- Something of value, known as consideration, must be exchanged to complete the transaction
Here is an example:
Tom offers Sam a job in his Butchery. Sam accepts the offer. Tom offers terms of the agreement to Sam. These include the rate of pay which is above the industry award rate, the hours of work which will be between 7am and 2pm on Saturdays and Sundays, the type of employment which will be permanent part time with a three month probation period and the date the employment will commence. Sam agrees to these terms. Tom asks Sam to provide his bank account details, Tax File Number and superannuation fund details on his first day of employment.
Figuring out whether someone agrees to be legally bound is not always straightforward. However in this case, both parties are serious about their agreement. There is a start date for employment. The rate of pay has been set. There aren’t any significant details that need to be worked out before Sam can commence his new job. So it is likely in this situation that Tom and Sam both intend to be legally bound by their agreement.
Finally, valuable consideration needs to be exchanged. In the simplest terms, Sam has promised to do work for Tom and Tom has promised to pay Sam for the work.
There are other requirements for a valid contract. For example, Sam has to be legally able to enter a contract. This usually means being an adult. However we all know that teenagers can be legally employed after a certain age, so there are some exceptions to the rule. Employment contracts are not valid if one of the parties has been coerced (pressured) into agreeing to the terms.
Finally, there are numerous legal requirements that employment agreements need to meet. These include minimum pay, maximum working hours, leave entitlements, superannuation, working conditions and freedom from discrimination in the workplace. These legal requirements are implied into employment contracts. This means that it doesn’t matter if they are written or agreed to verbally, they automatically apply.
Have you thought about this?
Okay, so you have a verbal employment agreement and you’re pretty sure it’s legally enforceable. However, in practice, verbal agreements can be difficult to enforce. This is because it is difficult to prove what was agreed to if it is one person’s word against another.
The upshot is: get it in writing otherwise when you try and enforce the agreement it becomes a game of ‘he said she said’ and while we like games no one wants to play a game with your source of income.