Are electronic signatures legally binding in Australia?
Are electronic signatures legally binding in Australia?

3 minutes read

Are electronic signatures legally binding in Australia?
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Posted:
05/04/2022
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Worknice offers paperless onboarding to create a fast, reliable and amazing initial experience for new hires. Gone are the days when you should expect a new hire to download an employment contract, print it out (do we even have printers at home anymore?), sign it, upload it, send it, re-send it (went to junk) and then spend hours in 2 years time trying to find the signed copy in the email archives.

So the solution is to get contracts signed digitally with the swish of the mouse or finger. The problem is that not everyone is completely familiar with digital signatures, and it can beg the question, “is this legally binding?”

So are electronic signatures legally binding in Australia?

Businesses are experimenting with electronic signatures in Australia and all over the world for a couple of reasons. Firstly, they want to reduce their paper consumption, both for environmental and economic reasons (cutting down trees is expensive). Oh and also, how frustrating are printers! Some companies — like Worknice — endeavour to be 100% paper-free. However, paperless doesn’t mean contract-free. This brings us to the second point, technology. It is faster and more efficient to exchange important documents electronically rather than to send them by snail mail. However, there are some important (and obvious) exceptions:

  • Signatures that must be witnessed, like statutory declarations
  • Official Commonwealth documents such as a passport
  • Wills, affidavits and testamentary documents
  • Powers of attorney (in some states)

Things such as employment contracts, policy acknowledgments, banking documents, and a wide range of other documents not mentioned above are left open to electronic signatures. Finally, it’s important to remember that electronic signatures need to meet certain conditions in order to make them legally binding – which is no different to ink signatures. These include:

  • Identity – you must be able to show you can identify the person signing
  • Understanding – you must be able to show that they knew and understood what they were signing
  • Reliability – you must be able to show that the method used to attach/affix signature was reliable

If the above factors are taken into account, it would be pretty difficult for someone to claim that a contract they signed electronically shouldn’t bind them. And even if they did claim they didn’t sign it, they would need to prove that someone else did.

Ensure compliance

There are many moving parts to the onboarding process, so how do you ensure compliance each and every time? Find out more.

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“Are signatures captured by Worknice legally enforceable?”

We get asked this question quite often. And it is mostly referring to employee contracts, and ensuring compliance in the onboarding process. We cannot provide a legal guarantee that all contracts sent through Worknice will be enforceable. There are too many variables to consider for us to do so, and some are beyond our control. however in order to unpack this question, let’s go back to the requirements needed to make a legally binding electronic signature:

You must be able to show you can identify the person signing

This requirement is entirely up to you. Did you address the contract to the right person? Did you use the correct email address and physical address? If so, then everything looks good. When you send a new hire an employment contract via Worknice, an email is sent to their personal inbox which prompts them to set up an account, confirm their details and to choose a secure password. The next page is where they sign the employment contract; after they have received the email to their personal inbox and after they have confirmed their identity. From this point in time we use IP addresses, timestamps and hashing to confirm who signed the contract when and from which device it was signed from.

You must be able to show that they knew and understood what they were signing

This isn’t something that Worknice can control. Did the new hire expect the contract? Was the number of hours per week and remuneration discussed during the hiring process? Is the contract consistent with those conversations? Is the contract one of Worknice’s templates? Or do you have your own clauses that have been added? If you’re worried, you can either get expert advice or simply use Worknice’s templates and take steps to ensure the new hire knows what the terms of the contract mean.

You must be able to show that the method used to attach/affix signature was reliable.

It is important to note that HR technology captures the required elements to make a document legally enforceable. This includes:

  • Ensuring no document tampering occurs for users who have signed a document at the time of their intent (through the declaration made). The HR platform also secures the document and emails the hashed documents out to the signatory’s email with a unique code that verifies the documents’ authenticity.
  • Implementing top-grade authentication requirements for our users, such as strong passwords and 2 Factor Authentication (2FA) to verify a user’s identity.
  • Implementing security practices to hold documents securely and undertaking verification activities to ensure that no tampering of the digital signature has occurred. This also includes auditing of access and modifications made to the HR platform.
  • Implemented auditing systems to monitor closely all the protocols and practices above to assist you in any disputes in relation to our document management processes.

Get a demo today

See first hand how digital signatures can save you time while also enhancing a new hires initial experience with your business.

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