We are ideally placed to provide strategic advice when conducting due diligence and negotiating the terms of any new employment contract. Our executive employment lawyers are particularly well-versed in breach of contract and restraint of trade matters and have successfully conducted some of the country’s most significant employment contract law cases.
Talk to us today about how we can help.
Employment contract law
Employment contracts may be created orally, in writing, or be partly oral and partly written. This means that offers which are made to you verbally and during negotiations may be as valid as those contained in the eventual written contract and can be upheld. Employment contracts can also include terms found in other documents, including policies, and job descriptions. This has particular relevance for breaches in codes of conduct and policy which adversely affect you.
Maurice Blackburn are the experts in employment law and can advise you on all your employment contract rights and obligations. We provide advice in relation to all aspects of employment contract law and can ensure that your current rights and future interests are protected.
If you have concerns about your current employment contract, or are negotiating the terms of a new contract, talk to us today about how we can help.
Non compete clauses
Non-compete clauses are post-termination provisions which restrict your right to set up a competing business, usually within a geographical area and for a specific period of time. Non-compete clauses can have serious consequences for your future employment and business opportunities, and the breach of such a clause can lead to costly litigation.
Before signing an employment agreement, make sure you read and understand all parts of the contract, particularly any non-compete and restraint of trade clauses. If you believe a non-compete or restraint provision is or will be unreasonable, you should consider negotiating a change in the clause before signing the contract. Maurice Blackburn non compete clause lawyers can discretely and effectively negotiate the terms of your next employment contract on your behalf.
Talk to Maurice Blackburn today about our employment contract legal services.
Restraint of trade
Restraint of trade clauses are intended to protect the employer’s business interests. These clauses attempt to regulate an employee's conduct while still engaged in the employment relationship and to restrict a former employee's conduct after the employment relationship has ended. Complex ‘cascading’ restraint clauses are becoming more common and have been the subject of a number of legal cases. This is an area in which Maurice Blackburn employment lawyers have seen significant success.
In broad terms, restraint of trade clauses are enforceable to the extent “reasonably necessary” to protect the “legitimate business interests” of the employer. The law will, for example, protect your employer’s trade secrets, confidential information, customer connections and staff relationships. However, for example, an employer can’t protect itself against simple competition from former employees. This means you are entitled to use any expertise acquired in the service of your former employer in legitimate competition.
If you are negotiating a new employment contract or if you need legal advice regarding your current contract, Maurice Blackburn are the experts.
Talk to one of our expert employment contract lawyers about how we can help.
Types of Employment Law Services
- Employment contracts
- Employment contract law
- Employment contract reviews
- Breach of employment contract
- Restraint of trade
- Dismissal & redundancy
- Unfair dismissals
- Wrongful dismissals
- Redundancy entitlements
- Unfair termination
Frequently Asked Questions
The terms of an employment contract may be express and/or implied.
Express terms are those terms that are explicitly agreed. In a written employment contract, the express terms will be the written terms. In a contract that is partly oral and partly written, the express terms will include both the written terms and any terms agreed verbally.
On rare occasions documents other than the written contract, such as policies, may be included in the contract.
Where no written contract exists, it may be necessary to examine all of the surrounding circumstances to determine the agreed express terms. This may include reviewing telephone conversations and SMS records, facsimiles and e-mails to determine what agreement was reached by the parties.
Employment contracts often cover only the key elements of the employment relationship, such as position, wage rates, superannuation and work location. In order to make the contract effective, the law may 'imply' a range of other terms into the contract to ensure it can operate effectively.
Implied terms are those that the parties have not agreed to, but which nonetheless form part of the contract. Implied terms may arise from the operation of the law, from custom and practice or by statute. In addition, terms may be implied where it is clear that the parties would have included the term if they had turned their minds to it.
One commonly implied term is that of the duty of good faith. This requires an employer to not act capriciously, arbitrarily or irrationally when exercising a power of discretion. Reliance on this duty, by an employee, can arise when disputing an employer’s decision not to exercise its discretion to pay a bonus.
There also exists an implied duty, at law, of mutual cooperation. Mutual cooperation requires the contracting parties to actually do the things, which they have already agreed, so that the benefit arising from that agreement can occur.
Finally, another common implied term arises where an employment contract does not 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'.
Where the parties have reduced the employment contract to writing, there is less scope for terms to be implied. The more detailed the contract, the less willing the courts will be to imply additional terms.
Contracts sometimes 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, notwithstanding the 'entire agreement' clause.
Executive remuneration package components can include such things as sign-on bonuses, commissions, relocation allowances, housing or accommodation, children’s education, share options, first-class air travel, interest-free home loans etc.
An employment contract can be varied by agreement between the parties, subject to an express right conferred on the employer to make unilateral amendments. In the absence of such a right, an employer cannot unilaterally vary the terms and conditions of employment.
If an employer tries to vary the terms of a contract without agreement, this may constitute a repudiation of the contract and allow the employee to terminate the contract and 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)
- mutual agreement, or
- abandonment by the employee.
An employment contract may also come to an end by operation of law.
Either party may bring an employment contract to an immediate end if the other party commits a serious or fundamental breach of the employment contract. If a fundamental breach of contract has occurred, it may allow an employer to terminate the contract without paying the employee any notice or allow the employee to resign without any notice.
Generally, a fixed term contract cannot be terminated before the end of the specified fixed term period. Fixed term employment is usually excluded from unfair dismissal laws, however the inclusion of an early termination clause means it is not a true fixed term contract for the purposes of such laws. The employee may be able to bring an unfair dismissal claim where there are no other statutory exclusions applicable to the employee’s employment.
A fixed term contract can only be terminated:
- if one party has breached an essential term, or
- by allowing the fixed term to expire.
If an employer wants to end a fixed-term contract early, it may have to pay out the balance of the contract.
A fixed term contract will, otherwise, automatically come to an end on the expiry of the fixed term without either party having to terminate the contract. However, if an employer continues to accept an employee's labour after this date, the contract may be deemed to have been converted to an indefinite contract.
If this occurs, the employer will then only be able to terminate the contract (without other cause) by paying reasonable notice. For this reason, if you have a fixed term contract, or an oral contract, it is very important that you seek legal advice before signing a new contract - you may be losing valuable rights.
An employment contract that does not have a fixed expiry date can only be terminated in accordance with its terms.
If the contract does not have a clause providing for how it can be terminated there is a common misconception that the employer can simply terminate the contract without notice. However, in these cases the law will imply a term that the contract can only be terminated on 'reasonable notice' or payment in lieu.
What is 'reasonable notice' depends on the circumstances of each contract. However, relevant factors include:
- seniority of position
- length of service
- anticipated length of employment, and
- any detriment the employee suffered in order to take-up the position.
Reasonable notice can in some cases be as much as 12 months’ notice or payment in lieu. It is therefore important that you seek advice about your reasonable notice entitlement.
More often, the contract will provide for termination on notice. The Fair Work Act 2009 prescribes minimum periods of notice that an employer must give an employee. The notice provided for in the contract must be no less than that provided for under the legislation.
It is also common for contracts to give an employer the right to terminate the contract without notice if the employee has committed serious misconduct, such a fraud, theft or violence.
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 rate, bonuses and superannuation contributions.
If there is no provision in the contract that allows an employer to make payment in lieu of notice, an employer must allow the employee to work out their notice period. This can be important in circumstances where, for example, an employee's visa depends on them remaining in employment.
An alternative to payment in lieu of notice is to place an employee on 'gardening leave'. This term describes the situation where the employee remains employed and continues to draw a salary during their notice period, but is not required to attend or perform work.