Having issues with your contract of employment?
How we can help with your employment contract
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.
Our experienced employment lawyers can review your employment contract to ensure it accurately reflects the terms and conditions of employment you have negotiated with your employer, provide advice on how to reduce risk, improve job security and tailor the contract to your individual needs.
Our expert lawyers will review your contract and provide our feedback in a one-on-one meeting.
We do all this for a flat fee of $1,200 (incl. GST), providing you with the peace of mind that your contract protects and provides for you, not just for your employer.
We protect your rights
Laura was offered a senior position with a new employer. She was asked to sign an employment contract by her new employer. Laura wanted to ensure that the contract contained the benefits and entitlements she had been offered, and did not compromise her rights.
We reviewed Laura’s employment contract and advised on several areas that required amendment. This included her notice period (which was inadequate for an employee at her level of seniority), and the restraint of trade clause which was broad and onerous.
We offered recommendations on how these clauses should be amended to improve her job security and protect her interests. We also provided her practical advice on how to negotiate these changes with her new employer.
With the benefit of our advice, Laura successfully negotiated the changes we recommended, and signed with improved terms and conditions.
Frequently Asked Questions
What are express and implied terms in an employment contract?
All employees have a contract of employment. Where there is no document setting out the terms of the contract, the contract may be oral. Whether the contract is written or oral, the terms of an employment contract may be express or implied.
Express terms are those terms that are explicitly agreed. They generally include all the terms set out in a written contract of employment. But they can also include terms set out in other documents, like policies, and they can be oral as well.
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.
Written employment contracts often 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 into the contract.
Terms may be implied by operation of the law, by custom and practice or by the facts surrounding the employment.
For example, employment contracts may contain an implied term requiring the employer to act in good faith and to cooperate. The scope and content of the duty is notoriously complex. However, it might prevent an employer, for example, from capriciously withholding a bonus or suspending an employee.
Finally, another 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'.
Where the parties have reduced the employment contract to writing, there is less scope for terms to be implied. Broadly speaking, the more detailed the contract, the less willing the courts will be to imply additional terms.
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, notwithstanding the 'entire agreement' clause.
What are the components of an Executive Remuneration Package?
Executive Remuneration Package components can include elements such as sign-on bonuses, commissions, relocation allowances, housing or accommodation, children’s education, share options, first-class air travel, interest-free home loans, and more.
How can an employment contract be varied?
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. In the absence of such a right, an employer cannot unilaterally vary the terms and conditions of employment.
It is important to get advice about possible variations of a contract of employment. Sometimes, an attempt to vary the terms of the contract can amount to a repudiation, allowing the innocent party to elect to terminate the contract and sue for damages.
How can an employment contract be terminated?
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.
What is reasonable notice?
Many employment contracts, both written and oral, do not contain clauses about the amount of notice required to terminate the contract. That does not 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’. Recently, the Courts have taken inconsistent approaches to the issue of reasonable notice, with some ruling that the minimum entitlement to notice pursuant to the Fair Work Act 2009 (Cth) renders it unnecessary to imply reasonable notice in employment contracts. This issue awaits determination by a superior Court.
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.
What is payment in lieu of notice?
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.
What is 'gardening leave'?
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.
What are restraint of trade clauses?
Restraint of trade clauses attempt to restrict a former employee's conduct once the employment relationship has ended. These clauses can prevent an employee from working for competitors or dealing with clients and staff, even after the employment has terminated. They can have serious consequences for your future employment and business opportunities.
Restraint of trade clauses differ widely. A typical restraint of trade clause will purport 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 relationship 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.
Is a restraint of trade enforceable?
Restraint of trade clauses are generally only enforceable to the extent the employer can show it is reasonably necessary to protect the employer's legitimate interests.
An employer can have a range of legitimate business interests, including, primarily, confidential information, customer connections and workforce stability.
If a court finds that a restraint goes beyond what is reasonable to protect the legitimate business interests of an employer, then the restraint of trade clause may not be enforced.
What is a cascading restraint of trade clause?
Cascading clauses contain a series of overlapping restraints. For example, a clause might purport to restrict an employee from working for competitors for 12 months, or if that is unenforceable, for 3 months. If the Court finds a 12-month restraint unenforceable, the employer may still be able to rely on the 3-month restraint.
However, the clause still needs to operate effectively with the severed clause missing. It’s important to get advice on a cascading restraint clause. A few words here or there could be the difference between an onerous restriction on your future and an unenforceable clause.
What sorts of things do the courts consider for restraint of trade clauses?
Whether a restraint of trade clause is enforceable depends on a number of factors. The courts will consider:
- 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.
How are restraints of trade enforced?
The first step that employers often take when they are considering enforcing a restraint of trade clause or relying on a common law doctrine against an employee is to issue a letter of demand to the employee. Sometimes, in the post-employment context, the former employer chooses to share this letter of demand with the employee's 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 seeking an interlocutory injunction, 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 (that is, that there is a serious question to be tried) and that the balance of convenience favours the granting of an injunction.
If an injunction is granted, the court will schedule the matter for a full trial. At a full trial, the criteria mentioned above will be considered and if the restraint is found to be enforceable the court will assess the damages flowing from any breach of the restraint by an employee.
Are restraint of trade laws the same across Australia?
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.
Josh BornsteinNational Head of Employment Law, Melbourne
"When the forces of darkness are on your back, you want Josh at your side," Julian Burnside QC
Experts in Employment law
Our team has an outstanding record of achieving terrific outcomes for employees in both the private and public sector. We assist our clients with a combination of strategy, tenacity and compassion.
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