How we can help
We can provide advice on:
- concerns about your current employment contract
- reviewing the terms of a new employment contract
We provide advice in relation to all aspects of employment contracts and can ensure that your current rights and future interests are protected.
New employment contracts
Before taking on a new role, it's vital to review and negotiate the terms of your employment contract. While this is true for all new employees, it's especially important for senior managerial or executive roles.
We can review your employment contract to ensure that it contains all the benefits and entitlements you've been offered and doesn't compromise your rights. We also provide advice on how to reduce risk, improve job security and tailor the contract to your individual needs.
Contract review costs
Our expert lawyers will review your contract and provide feedback in a one-on-one meeting. We do all this for a flat fee of $690 (incl. GST).
Employment contract information
Whether an employment contract is written or oral, the terms of the contract may be express or implied.
Express terms are explicitly agreed. Generally, they include all the terms set out in a written employment contract. They can also be oral or include terms set out in other documents like policies.
If there is no written contract, it may be necessary to examine all of the surrounding circumstances to determine the agreed express terms. This may include reviewing telephone conversations, SMS records, electronic messages and e-mails to determine what agreement was reached by the parties.
Written employment contracts sometimes cover only the key elements of the employment relationship, such as position, wage rates, superannuation and work location. However, the law often 'implies' a range of other terms. Terms may be implied by operation of the law, by custom and practice or by the facts surrounding the employment.
A common implied term arises when an employment contract does not expressly state how it can be terminated. In such cases, the law will imply a term that the employment contract can be terminated on 'reasonable notice'.
Sometimes contracts contain 'entire contract' clauses. These clauses generally state that the written terms of the contract are the entire agreement between the parties. In some circumstances additional terms can be implied into these contracts, in spite of the 'entire agreement' clause.
Broadly speaking, the more detailed the contract, the less willing the courts will be to imply additional terms.
An employment contract can be varied by agreement between the parties. Sometimes, employers have a right to make unilateral variations to some terms of the contract.
It is important to get advice about possible variations. An attempt to vary the terms of a contract can have unintended consequences such as repudiation. Repudiation is a serious matter where one party renounces their obligations to that contract forcing termination. The innocent party then has the option to sue for damages.
An employment contract may terminate in a number of ways, including:
- expiry of a fixed term
- completion of a specified task
- unilateral termination (such as dismissal or resignation) on notice
- instant dismissal for serious misconduct
- abandonment by the employee.
Many employment contracts, both written and oral, do not contain clauses about the amount of notice required to terminate the contract. That doesn't mean an employer can terminate the contract without notice. Rather, in such cases, the law will imply a term providing that the contract can be terminated on ‘reasonable notice’.
How long 'reasonable notice' is depends on the circumstances. Relevant factors include:
- seniority of position
- length of service
- anticipated length of employment
- any detriment the employee suffered in order to take-up the position.
In some cases reasonable notice can be as much as 12 months. However, the cases on reasonable notice are increasingly difficult and complex. It's important that you seek legal advice about your reasonable notice entitlement.
Employment contracts can include a term that allows an employer to make payment in lieu of giving notice. This means that the employer can pay to the employee an amount equal to what they would have earned had they worked during their notice period and bring the contract to an immediate end.
For employees covered by the Fair Work Act 2009, payment in lieu of notice must be calculated at the employee's full rate of pay, including allowances, penalty rates, bonuses and superannuation contributions.
An alternative to payment in lieu of notice is to place an employee on 'gardening leave'. This term describes the situation when the employee remains employed and continues to draw a salary during their notice period, but is not required to attend or perform work.
Gardening leave can have important consequences for a range of other entitlements, including entitlements under employee share schemes and leave, and your ability to start a new role during the gardening leave period.
Restraint of trade clauses attempt to restrict a former employee's conduct once the employment has ended. These clauses can prevent an employee from working for competitors or dealing with clients and staff. They can have serious consequences for your future employment and business opportunities.
Restraint of trade clauses differ widely. A typical restraint of trade clause intents to restrain a former employee from:
- working for a competitor in a particular geographic area and for a specific length of time
- disclosing confidential information after the employment has ended
- poaching or enticing any other employee away from the employer
- approaching, soliciting or accepting work from the former employer’s clients or customers.
Restraints often apply for a specified period of time and in a specified geographical area. They can apply to employees, partners and independent contractors.
Some states have legislation on restraint of trade. For example, in NSW, the Restraints of Trade Act 1976 allows the court to read down a restraint of trade clause so that it is reasonable. This means that the NSW courts can modify the restraint of trade clause in a contract to what a court believes is a reasonable restraint.
Cascading restraint clause
Cascading clauses contain a series of overlapping restraints. For example, a clause might intent to restrict an employee from working for competitors for 12 months, or if that is unenforceable, for 3 months. So if the court finds a 12-month restraint unenforceable, the employer may still be able to rely on the 3-month restraint.
It’s important to get advice on a cascading restraint clause. The clause still needs to operate effectively with the severed clause missing. A few words here or there could be the difference between an onerous restriction on your future and an unenforceable clause.
Enforcing a restraint of trade clause
Restraint of trade clauses are generally only enforceable if the employer can show that it's reasonably necessary to protect the their legitimate interests. An employer can have a range of legitimate business interests, including confidential information, customer connections and workforce stability. If a court finds that a restraint goes beyond what's reasonable to protect the legitimate business interests of an employer, then the restraint of trade clause may not be enforced.
- The first step that employers often take when enforcing a restraint of trade clause against an employee is to issue a letter of demand. This notice gives the employee a chance to rectify the situation and stop breaching the restraint of trade clause. The letter can also be shared with a new employer.
- If an employer believes there is imminent harm to its business from the breach of a restraint of trade, the employer may lodge an application in court for an interlocutory injunction. An injunction is a court order requiring a party to do or cease doing a specific action, pending a full trial of the matter. To be successful in obtaining an interlocutory injunction against an employee, the employer must show that there are reasonable prospects for success against the employee (i.e. that there is a serious question to be tried).
- If an injunction is granted, the court will schedule the matter for a full trial. If the restraint is found to be enforceable, the court will assess the damages caused by the breach. At a full trial, the following criteria will be considered:
- the interests of the employer, including consideration of the nature, locations and goodwill of the employer's business and the location of the employer's clients
- the nature of the work of the employee being restrained, including the employee's seniority and the nature of the employee's role and duties, including the level of contact the employee has with clients
- the scope and duration of the restraint, including the time and area proposed to be covered by the restraint
- benefits to the parties from entering the restraint
- the bargaining position of the parties.
Executive Remuneration Package components can include elements such as:
- sign-on bonuses
- short and long term incentive schemes
- relocation allowances
- housing or accommodation
- children’s education
- share options
- first-class air travel
- interest-free home loans.
We're here to help
We have an outstanding record of achieving successful outcomes for employees in both the private and public sector. We know how to navigate this increasingly complex and ever-changing area of the law.
Get in touch. Call us on 1800 810 812 to book an initial consultation. Your first consultation costs $690 (incl GST).
At your one hour consult our lawyers will provide advice on your situation, the best action to take, and next steps.
Most of our cases are resolved out of court, and discretion is assured.
Maurice Blackburn has won more than $3 million in unpaid wages and entitlements for our clients while continuing to pursue 7-Eleven franchisees to recover money that is owed to the workers.
We’re here to help. Get in touch with your local office.
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Our Canberra office is now closed, but our team continues to serve ACT clients and are available for phone and video appointments. If you need legal advice, please call us on 1800 675 346.
We have lawyers who specialise in a range of legal claims who travel to Tasmania. If you need a lawyer in Hobart, Launceston or elsewhere in Tasmania, please call us on 1800 675 346.