The $220 Mistake: What AI and Template Contracts Miss
A tradie mate of mine nearly handed his first employee a contract he pulled off an AI tool. It looked fine. It wasn't.
The contract that looked fine
It had the right headings. Pay rate, hours, a probation clause, a confidentiality section that sounded properly lawyer-ish. He was two minutes from sending it when he asked me to have a quick look — mostly out of politeness, I think, not because he suspected anything.
The Award coverage was wrong. The restraint clause wouldn't have held up if it were ever tested. And the "casual" role he'd described didn't actually meet the test for casual employment — which meant he was exposed to exactly the kind of claim that turns up eighteen months later, not the kind that gets flagged at the time.
"But it read like a real contract." That's exactly the problem.
Confident isn't the same as correct
That's what AI and template contracts do well — they're confident. They'll hand you something that looks complete, sounds professional, and reads like it was written by someone who knew what they were doing. What they won't do is tell you when it's wrong.
They don't know your Award coverage. They don't flag an unenforceable clause — they'll happily write you one that sounds strong and does nothing. They won't catch that the role you've described needs a different classification altogether. AI is confident by design. It's not built to say "actually, I'm not sure about this bit — you should check."
This isn't an anti-AI post. I use it too, most weeks. The difference is knowing what's wrong when it hands me something and knowing what to ask next. That's the part a template can't do for you.
Why nobody checks this stuff before it's too late
Nobody sits down to hire their first employee thinking about Award classification. You're thinking about whether they'll turn up on time, whether they'll fit in, whether you can actually afford them. The contract is the last box to tick before you can stop thinking about it.
So it gets treated like paperwork — something to get through, not something to get right. And because a wrong contract doesn't look wrong, there's no moment where it pulls you up. Nothing flashes red. It just sits in a drawer until something goes wrong — a dispute, an audit, someone leaving unhappy — and that's when you find out what it actually said.
For a first hire, the real risk was never a messy contract. It's a confident one that's wrong in a way you won't spot until it costs you.
What to actually check before you send anything
Before a contract goes to a new employee, worth running through:
Does the role genuinely sit under an Award, and which one?
Is the pay rate compliant for the hours and pattern you've described — not just the headline rate?
If there's a restraint or confidentiality clause, would it actually hold up, or is it decoration?
Have you got anything for their first week, or is onboarding "figure it out as you go"?
It doesn't need to be complicated. It needs to be right.
None of this is about slowing down your hiring or adding red tape you don't need. It's about not guessing on the two or three things that actually matter — the ones that don't show up as a problem until much later, and cost a lot more than they would have if someone had checked at the time.
If you're about to make an offer and you're not fully sure what you don't know yet, that's exactly the conversation worth having first — before anything gets sent, not after.
Getting your first hire set up properly doesn't have to mean starting from scratch or hiring a lawyer for a two-page contract. It means having someone look at it before it goes out — [First Employee Setup Package →]
