The Risk
Contracts seemed
“good enough”,
protections unclear
The Trigger
Employment terms
challenged
The Cost
From $2,180
To $6,000
The decision to rely on existing contracts
An employer with approximately 20 employees had engaged staff over time using a mix of old templates, basic letters of offer and contracts downloaded from various sources.
Some contracts were incomplete. Others did not reflect the actual role, hours, classification, probation arrangements or post-employment protections the business assumed were already covered.
The business had been advised to update its employment contracts so the documents were compliant, fit for purpose and tailored to the roles being performed. The upfront investment was $2,180.
The contracts were not updated. Management considered the documents “good enough” and did not see any immediate issue. Staff were working, there were no disputes on foot, and reviewing contracts felt like an administrative task that could wait.
When the issue escalated
The risk became clear when one employee resigned and commenced work with a competitor shortly afterwards. Concerns were raised about client relationships, confidential information and the lack of clarity around the employee’s obligations. At the same time, another employee challenged their classification and employment terms, arguing that the written documentation did not reflect what had actually been agreed.
That exposed a broader problem. The business had little contractual protection to rely on. Key terms were either missing, outdated or too generic to be effective. Important provisions around duties, notice, confidentiality, intellectual property and post-employment restraints were inconsistent or unclear.
External advice was required urgently. New contracts then had to be prepared. Managers were left dealing with preventable disputes and uncertainty that could have been avoided with proper documentation from the outset.
Estimated impact
$6,000 in advice, contract remediation and dispute management costs
2–4 weeks of management time diverted into resolving contractual uncertainty
Reduced ability to protect confidential information, client relationships and business interests
Increased risk of employee disputes about terms, entitlements and expectations
Disruption and frustration caused by unclear or unenforceable documentation
What could have been resolved through a targeted contract review became a reactive exercise in risk management, documentation repair and dispute response.
The takeaway
Employment contracts are not just administrative paperwork. When contracts are outdated, inconsistent or too generic, the business often discovers the gap only when something goes wrong.
“A contract is only useful if it works when you need it. We often see businesses assume they are protected because there is a signed document on file. But when someone resigns, challenges their terms or takes confidential information with them, the real question becomes whether that document actually says what the business thinks it says. Good contracts do more than record the job. They support the employment relationship, clarify expectations and protect the business when things change.”
Karen Arnold
Managing Director, EWS