Employers suffer under Australian employment law because the law favours employees. Fight back by building a tailored Legal Consolidated Employment Contract on our website. Secure your employer rights and manage legal risks effectively.
In Australia, while employers may include post-employment restraint clauses in employment contracts to protect legitimate business interests, courts generally do not enforce these clauses if they unreasonably restrict a former employee's ability to work in their chosen trade or profession. Legal Consolidated automatically includes the maximum protection that the laws allow in your employment contract.
The government does not want to stop your ex-Employees from working in their chosen trade or profession. Irrespective of what you put in your Employment Contract:
While you cannot prevent your ex-employee from working in their field of expertise, preventing them from stealing your clients, suppliers, and confidential systems is possible. Legal Consolidated Employment Contracts are designed to protect your business's goodwill, akin to safeguarding your office furniture or tools. For example:
An insurance broker can continue to work as an insurance broker but, under a Legal Consolidated Employment Contract, is restrained from soliciting former clients. See AEI Insurance Group Pty Ltd v Martin (No 4) [2024] FCA 1110. The Federal Court ordered a former employee to pay $500,000 in damages for breaching a non-solicitation clause.
A shipbuilder can continue to work in the shipbuilding industry but is prevented from joining a direct competitor with a Legal Consolidated non-compete clause. See Austal Ships Pty Ltd v Clay [2018] WASC 178. Here, the Supreme Court granted an interim injunction to enforce the restraint.
A real estate agent can continue to work as a real estate agent breaches their previous Employment Contract if they take client data or sabotage their former employer’s records. The NSW Supreme Court found that a real estate agent had sabotaged his former employer by altering client contact information before leaving to start his own agency. The court ruled such conduct was a breach of duty.
In the case of Agha v Devine Real Estate Concord Pty Ltd [2019] NSWSC 256, the New South Wales Supreme Court found that real estate agent Roger Agha engaged in "systematic and repeated sabotage" by altering over 900 client contact records before leaving his employer, Devine Real Estate, to join a competitor. This conduct was deemed a breach of his Employment Contract. Subsequently, the Tribunal cancelled Agha's real estate license for at least a year due to improperly using his bosses' confidential client information.
Legal Consolidated Employment Contracts include non-compete and non-solicitation clauses, set as wide as the law allows. These clauses help prevent former employees from using insider knowledge and employer relationships to their advantage.
Under Australian employment law, Legal Consolidated automatically includes restraints of trade, including time and area restrictions, in our Employment Contracts. These restraints protect the employer's business by safeguarding confidential information, maintaining customer relationships, and preserving workforce stability.
This is how time and area restraints work:
Time restraints limit the period during which a former employee is prohibited from engaging in competitive activities after leaving you, the Employer. The purpose is to prevent immediate competition while allowing the employer time to secure customer relationships and confidential information.
Reasonableness: The duration of the restraint must be reasonable. What constitutes "reasonable" depends on the industry, the employee’s role and influence, and the nature of the competition. For example, a duration of six months might be reasonable for a mid-level manager, while a longer period could be justifiable for higher-level executives with access to critical business strategies.
In Employsure Pty Ltd v McMurchy [2022] NSWCA 180, the New South Wales Court of Appeal upheld a nine-month post-employment restraint. The court found the restraint reasonable to protect the employer’s business interests, including confidential information and client relationships. This case illustrates that courts assess the reasonableness of a time restraint based on factors such as the employee’s position, access to sensitive information, and industry standards.
Geographic restraints restrict the areas where a former employee can work in competing activities. This helps prevent direct competition in markets where the employer operates.
Scope and Scale: Similar to time restraints, the geographic scope must be reasonable and align with the areas where the employee worked or had significant influence. For instance, restricting a former employee from working within a certain radius of their former office may be considered reasonable, depending on the nature of the business and the employee's role. Restricting an employee to the whole of Australia is less so.
In Habitat 1 Pty Ltd v Formby (No 2) [2017] WASC 331, the Supreme Court upheld a 12-month non-compete restraint against a co-founding director of an office fit-out business. The restraint prevented the former director from competing in both Perth and Melbourne, the primary areas of the company's operations. The court found the geographic scope reasonable, as it aligned with the regions where the business operated, and the director had significant influence.
This case demonstrates that courts may uphold geographic restraints in an Employment Contract when necessary to protect an employer's legitimate business interests and are reasonable in scope.
In assessing the reasonableness of restraints in employment contracts, Australian courts consider three main factors:
Legitimate Business Interests: The employer must demonstrate that the restraint protects genuine business interests, such as client connections or trade secrets.
Balance of Interests: The restraint should protect the employer’s interests without unduly harming the employee’s ability to earn a living.
Public Interest: The restraint should not be against the public interest, such as limiting competition more than necessary.
If a court finds a restraint clause to be unreasonable in either time or geographic scope, it might adjust the clause to what it considers reasonable, or it might not enforce it at all.
In Just Group Ltd v Peck [2016] VSC 614, the Supreme Court of Victoria considered the enforceability of a restraint clause that sought to prevent a former employee from working with competitors for two years. The court found that while the employer had legitimate business interests to protect, a two-year restraint was excessive and unreasonable. Consequently, the court read down the restraint period to a more reasonable duration, reflecting the need to balance the employer's interests with the employee's right to work.
This case illustrates that courts will enforce restraint clauses when necessary to protect an employer's legitimate business interests and when they are reasonable in scope and duration.
Legal Consolidated determines 'reasonable' time and area restraints in Employment Contracts by employing cascading clauses. These clauses provide multiple, descending levels of time and geographic restrictions, enhancing the likelihood that if broader restraints are deemed unreasonable, narrower ones may still be enforceable. Under common law, courts may apply the 'blue pencil' principle to modify restraint clauses. This approach allows a court to sever unreasonable parts of a clause, enforcing only the reasonable provisions. However, courts cannot add or modify words; they can only remove offending parts. This underscores the importance of precise drafting in restraint clauses.
In Austal Ships Pty Ltd v Clay [2018] WASC 178, the Supreme Court of Western Australia considered a contract containing cascading restraint provisions. The court granted an interim injunction, indicating that a serious question was to be tried regarding the reasonableness and enforceability of the non-compete restraint. This case demonstrates that well-drafted cascading clauses can increase the chances of a restraint being upheld, as courts may enforce the restraint to the extent they find reasonable.
Yes, all non-solicitation restraints in employment contracts must be 'reasonable' for both:
Yes, all Legal Consolidated Employment Contracts contain restraint clauses automatically to safeguard your business interests.
You cannot know what is reasonable. But Legal Consolidated has a method for dealing with this uncertainty.
Our sample contract illustrates how we address the issues of 'time after the employee leaves' and 'geographical area'. We implement these restraints in 'stages'. This means if a court finds the 'time' restraint excessive, it may enforce a shorter period instead. Without these staged restraints, a court might not uphold any 'time' restrictions at all.
In Entello v Firooztash, the Employer had to go to court. This was to enforce a six-month non-solicitation restraint. This is because the Employment Contract failed to contain the 6-month restraint. Ours does.
The Court has broadened the concept of ‘solicit’ in favour of the Employer. Our Employment Contracts adopt this better definition.
The Court states that ‘solicit’ means ‘to ask for business’. That is not new. What about if your ex-Employee does not telephone or email your clients? In other words, the ex-Employee does not expressly ask the client to come and join their new business. The ex-Employee may not have approached the client at all – it may be the client approaching your ex-Employee.
The ex-Employee is still ‘soliciting’ that is ‘asking for business’ if he gives the impression of wanting the client. It is soliciting if there is any encouragement. This is a new law and highly beneficial to you, the Employer. This is provided that you have an up-to-date Employment Contract built by Legal Consolidated.
Many Legal Consolidated agreements have confidential requirements and rules to restrain someone from taking your intellectual property, clients and staff.
These include Employment Agreements, Independent Contractor Agreements, Partnership Agreements, Unitholders Agreements, Company Constitutions, Shareholder Agreements and Unit Trust deeds.
Such agreements operate under different laws. So the clauses are all different. For example, the laws in Australia are very protective of Employees. Therefore, the Employment Contract is drafted to accommodate all State and Federal laws.
Yes, over time Employment Contracts go out of date. They are therefore become useless. However, Legal Consolidated Employment Contracts are subservient to mandatory employment laws. This stops your Employment Contract from going out of date.
Legal Consolidated Employment Contracts are subservient to mandatory employment law.
When the laws change, the Employment Contract is 'read down' so as not to offend the new mandatory law.
When Awards, Modern Awards or rules change the Employment Contract is read down to comply with the new mandatory obligations.
From time to time you and your Employee may wish to change the terms of the Employment Contract.
An advantage of a Legal Consolidated Employment Contact is that you can do so with an exchange of emails.
So for a car and Fringe Benefits Tax (FBT) for an employee, get the wording from your accountant and put that information in an email to your Employee.
‘Subject to any applicable legislation, your entitlement to sick leave is not carried over from the year in which the entitlement arose to the next year. The entitlement expires on each anniversary of your employment with us.’
Fair Work says sick leave accumulates and rolls over every year. Just confirming, whilst Fair Work says it does accumulate, it does?
Your employee may currently be under Fair Work legislation. That may change throughout the life of the Employment Contract. If it does change our Employment Contract automatically updates.
Similarly, your Employee may currently be under Commonwealth legislation. This is rather than State legislation. But this may change in the future through no fault of you or your Employer. If it does your Employment Contract automatically updates.
Similarly, currently, you are correct, under Fair Work legislation, sick leave is carried over. But that may change in the future. In which case the Employment Contract automatically updates. For example, if the rules, legislation or Modern Awards change to say that sick leave does not need to be carried over then you, as the Employer, are protected.
The Legal Consolidated Employment Contract:
Yes. You and your Employee may wish to alter the Legal Consolidated Employment Contract. You can alter the Employment Contract by an exchange of emails.
Email is the primary means of communication from employer to employee. With the ever-increasing use of emails comes the reality that more and more employment matters are negotiated through email.
For an Employment Contract, you need:
Gone are the days when it takes a hard copy of a contract signed in ink with a pen to be the only way or amend an employment contract.
But you can only do this if the Employment Contract expressly allows a change to the contact via an exchange of emails.
Legal Consolidated expressly allows you to update the Employment Contract by an exchange of emails. (If you do not have a Legal Consolidated Employment Contract then check with the law firm that prepared your Employment Contracts.)
We put in a unique set of powers. This allows the Employer to change the terms of the Employment Contract without getting your Employee's permission. This is via procedure manuals and policies. We are putting control back into your hands.
An Employment Contract is a two-way agreement. Both parties must agree. To change the Employment Contract both parties must freely agree. (This is why building a Legal Consolidated Employment Contract is important. It allows you to update procedures without going back to all the Employees.)
But what about changes to the Employment Contract for a specific employee? To update the Employment Contract you just build a new Employment Contract. But this has to be freely agreed to by both you and your employee. What if the old Employee does not want to sign the new Employment Contract?
Just because you want to update the Employment Contract does not mean your Employee has to accept the change. They are entitled to say “no” to a proposed replacement Employment Contract.
Casual employees have as many rights as every other Australian employee. The general rule is that the Employment Contract protects you from all employees. A casual employment agreement sets out rules such as confidentiality, policies, intellectual property, the rate of pay and termination notice.
You get disputes whether the employee is casual or otherwise. An Employment Contract reduces disputes. It also helps if you are attacked for underpayment where the casual argues they are permanent.
Your employees carry out different jobs. They may move from full-time permanent to part-time and casual. Your employee may start as casual. But later they get into regular hours of work. This is despite their casual employment.
WorkPac v Rossato is about a casual employee. The Federal Court of Australia stated that just calling your employee a “casual” does not automatically make them a casual employee.
A casual employee has work that is inconsistent, irregular or short-term. Casual employees whose work doesn’t fit that description can now claim that they are or have been permanent employees. They then claim additional entitlements. Paying casual loading to avoid or set off a liability to pay entitlements is not enough to escape. You need a legally prepared Employment Contract that complies with the law.
An employee can remain casual. However, the Employee needs to understand that by accepting the casual loading, they give up a retrospective claim for permanent employment entitlements. You need an Employment Contract prepared by Legal Consolidated Barristers and Solicitors.
Q: I have my first 0.5FTE (full-time equivalent) starting part-time. I know that I am obliged to nominate the days and hours that the employee works (for public holidays, sick leave etc.).
A: The benefit of a Legal Consolidated Employment Contract is that it is updated by an exchange of emails. Therefore, when you email the Employment Contract to the employee you, at that time, state what days and hours they are to work. And as that changes over the years you change them by another exchange of emails. You do not document the days and hours in the Employment Contract. You do not set it in stone. Rather you let the employee know by an exchange of emails.
For whatever reason:
Your current employee may be happy with no written employment contract. After all Employment Contracts only help you, the employer. Why should the employee weaken his position?
Similarly, the more out-of-date the Employment Contract the better for the Employee.
A good time to present the old Employee with a new Legal Consolidated Employment Contract is when you agree to an increase in the Employee's salary. Before the pay rise can take place the Employment Contract needs to be signed. A condition of the pay rise is that the Employer and Employee can agree on a new Employment Contract.
Legal Consolidated Barristers & Solicitors' Employment Contract accommodates employees who work from home, whether permanently or only some of the time. This flexibility ensures that all contractual terms and conditions remain applicable regardless of the employee's location. The Employer remains protected.
The Legal Consolidated Employment Contracts that you build on our website cover the terms and conditions of employment. This means that the same rules and expectations apply whether an employee is working from the office or home. This includes adherence to all relevant laws and regulations, and maintaining consistency to protect the employer.
By aligning the terms of the contract with the National Employment Standards, modern awards, and enterprise agreements, the employer is safeguarded against potential legal disputes related to employment conditions. This compliance reduces the risk of costly legal challenges and ensures that the business operations adhere to established laws and regulations.
The consistency across working conditions, whether employees are in the office or working remotely, helps maintain standardised operations. This uniformity is crucial for managing performance expectations and delivering consistent service and product quality, regardless of the employee's location.
The flexibility offered by Legal Consolidated's Employment Contract means that it can adapt to a variety of working arrangements. This adaptability is particularly beneficial in the modern workplace, where remote work is becoming increasingly common. It allows businesses to stay compliant with employment laws while accommodating the changing needs and preferences of their workforce.
The clarity of terms provided in the employment contract offers security not only to the employee but also to the employer. By explicitly outlining the rights and responsibilities of the home-based employee, our employment contracts help prevent misunderstandings and miscommunications that could otherwise lead to disputes or disruptions in work.
Our Employment Contracts include provisions specifically designed to protect sensitive business information and intellectual property, critical when employees work outside the traditional office environment. This includes data protection policies and confidentiality agreements that employees must adhere to, regardless of their location, safeguarding the business’s core interests.
The flexibility offered by our employment contracts, which accommodate both in-office and remote work, allows employers to manage their workforce more effectively. This adaptability can be particularly advantageous in adjusting to business needs and market conditions, which can fluctuate and require different staffing solutions.
While the employment contracts from Legal Consolidated Barristers & Solicitors ensure that employees retain their rights when working from home, they also provide significant protections for employers. These protections help manage legal risks, ensure operational consistency, and safeguard business interests, all of which are critical for maintaining a stable and productive work environment.
Fundamental terms are the foundation of an Employment Contract. Any change to them results in the formation of a new contract. The fundamental terms of an employment contract include:
To deal with these issues build a Legal Consolidated Employment Contract.
Sometimes the Employee leaks a secret. It leads to no damage to the Employer. But it causes a huge reputation risk. Damages are not enough. An injunction stops the Employee from talking about the secret information.
What if monetary damages are not a sufficient remedy for an Employee's breach? The Employer is entitled to equitable relief. This includes an injunction and specific performance. These are additional remedies for the Employee's breach.
In other words, if the Employee breaches the confidentiality obligations, the Employer is entitled to an injunction.
When deciding whether to grant an injunction, the court considers various factors. These include whether an injunction is necessary. If the breach can be adequately compensated with a financial award, the court might decide that an injunction is not necessary. Clauses such as those above record the parties’ agreement that an injunction is an appropriate remedy.
A government has many employment rules and awards designed for one purpose - to protect the Employee. Fight back with a Legal Consolidated Employment Contract.
Legal Consolidated Employment Contracts are unique in Australia. This is because the Employment Contact is drafted so that you can remove the Probation period.
If you do not want a Probation period then type in 0.
