Ensuring contractual protections are fit for purpose

With amendments to the Fair Work Act regarding non-compete employment clauses scheduled to take effect next year, employers are being urged to act now for the sake of commercial and business interests.

With the non-compete income threshold increasing to salaries of $190,100 and below, more workers are set to be protected by the proposed ban on the prevention of workers gaining employment by their organisation’s competitors.

Current discussions suggest the reforms will operate prospectively from the launch next year, but it remains up in the air whether any previous non-compete clauses will be void.

In this way, employers should be reviewing employment contracts as a matter of urgency, with impacts expected to be significant.

According to arch.law employment and workplace specialist Roger Lewis, “many businesses are treating the reforms as something that will need attention in 2027, but there is value in reviewing contracts and employment protections now.”

And, on the back of the income threshold changes, “organisations should identify which employees may fall below the threshold, reviewing existing restrictive covenant provisions and ensure other contractual protections remain fit for purpose.”

This period, Lewis continued, is the perfect time to consider potential risks and strengthen alternative protections and assess internal management of client relationships, ensuring commercially-sensitive information is appropriately protected.

He said: “Rather than waiting for the final legislation, employers should act now by reviewing employment contracts, strengthening confidentiality and non-disclosure obligations, and ensuring non-solicitation causes are specific, reasonable and tailored to the employee’s role and client relationships.

Lewis also noted that businesses operating across multiple jurisdictions may need to seek local review.

He explained: “Employment contracts are often rolled out across regions with minimal variation. Businesses should ensure Australian-specific legal requirements are properly reflected rather than assuming existing templates will remain effective.”

Lewis surmised that the proposed reforms will require employers to focus their attention on practical, protective measures throughout the employment lifecycle.

Want to see more stories from trusted news sources?
Make HR Leader a preferred news source on Google.