Employment Contracts & Policies
We can assist in preparing employment contracts and workplace policies that safeguard your business from potential threats such as employees poaching your staff, taking confidential information, or working for a competitor. We can also help protect your business from claims for breaching the Fair Work Act or an award.
Restraint of Trade
Restraint of trade clauses protect your business from unfair competition. It’s important that the restraint of trade clause is properly drafted. We see many restraint of trade clauses in employment contracts that are deficient.
At law, the starting position is that a restraint is not enforceable unless it is reasonable. The duty is on the employer to prove this. This test is essentially that the restraint of trade clause goes no further than necessary to protect the legitimate interests of the business.
If the restraint clause goes too far, it can be struck out. In Western Australia, and elsewhere in Australia except New South Wales, if the restraint cannot hold up without the struck out clause, then it’s likely the entire restraint will become unenforceable. This is because the Court does not rewrite clauses - only strike them out.
In New South Wales, the court does have the power to “rewrite” or read-down a restraint of trade clause that is found to be deficient. So this gives more room to save an invalid restraint clause. However, Western Australia does not have this luxury.
A ban on non-compete clauses for employees earning below the high income threshold has been proposed, but it is not law. The Government published an exposure draft Bill on 7 September 2026, with submissions due by 2 October 2026 and a planned start in 2027. Until a ban is passed, the general law above applies, but it is worth keeping new restraints under review.
Some general categories of protection that are common in restraint of trade clauses are:
General Categories of Protection
Restricting employees from competing against the business. This can include working for a competitor or setting up their own business.
Restricting employees from poaching clients, customers or patients - including prospective clients.
Restricting employees from poaching staff, including employees and contractors.
Restricting employees from dealing with or poaching suppliers or other key stakeholders in the business.
Award Compliance
It’s also important that an employment contract complies with any modern award that covers employees of the business. Many awards have an express obligation that an employer must notify the employee in writing of their classification level, working hours, pay rate etc.
We often see employment contracts which don’t take into account the award terms. If this occurs, then the business can be in breach of the award and can be subject to penalties.
Recent changes your contracts need to reflect:
- Fixed-term contracts (since 6 December 2023): a fixed-term contract generally cannot run for more than 2 years including extensions, cannot be extended more than once, and cannot be followed by consecutive fixed-term contracts for substantially the same work beyond those limits (s 333E), subject to exceptions such as specialised tasks, training arrangements, peak demand, government-funded positions and employees earning above the high income threshold (s 333F). Employers must also give the Fixed Term Contract Information Statement.
- Casual employees (since 26 August 2024): whether someone is a casual depends on the real substance of the relationship, including whether there is a firm advance commitment to continuing and indefinite work (s 15A), not just the label. Casuals can ask to convert to permanent employment under the employee choice pathway after 6 months (12 months with a small business), and you must give them the Casual Employment Information Statement at the start and at the times the Act requires. See our page on what the Closing Loopholes changes mean for employers.
- Pay secrecy: employees have a right to disclose, or not disclose, their pay and to ask others about theirs, and pay secrecy terms have no effect (ss 333B-333D).
- Right to disconnect: employees can refuse unreasonable contact outside their working hours (s 333M). If a role genuinely requires after-hours availability, say so in the contract and make sure the pay reflects it, because compensation for availability is one of the factors that decides whether a refusal is unreasonable.
Preconditions
An employment contract can also include some important preconditions such as obligations on the employee to pass a medical, to pass a criminal record check, to have certain qualifications etc.
It’s important to have these properly set out in the contract to ensure that no employment relationship starts until these conditions are satisfied. You don’t want to have a situation where the employee argues that the employment relationship started and demands payment of entitlements, even if certain important conditions have not been fulfilled.
Confidentiality & Intellectual Property
Another important aspect of employment contracts is to ensure that the company’s physical property such as laptops, computers, motor vehicles, intellectual property and confidential information are adequately protected.
We draft employment contracts to make it clear that:
The company owns the intellectual property
We make it clear that the employee has a duty to maintain confidentiality and that the confidentiality provisions apply even after the employment relationship ends.
The company’s property belongs to them and the employee has an obligation to return all the company property. We sometimes put optional clauses to require the employee to sign a statutory declaration to ensure that they have returned the property.
Set-Off
It’s important that the employment contract also has a proper set-off clause. A set-off clause is used in most cases to set off award entitlements. For example, if a business is paying an employee a rate higher than their award classification, then the excess payments can be used to set off other award entitlements.
It’s important that this set-off clause is drafted properly because if it’s not, then the business may not be able to set off the excess payments against other award entitlements. This could result in an underpayment claim and if a business underpays an employee then the business, and any other individuals involved in the contravention, are exposed to civil penalties.
Other Contract Terms
There are many other terms that go into an employment contract, including:
Location of work.
Conflict of interest.
Setting expectations for employees, including their duties.
Disclosure obligations on employees.
Workplace surveillance, including notice and consent, so the business does not risk breaching the Surveillance Devices Act 1998 (WA).
Drug and alcohol testing requirements including carefully drafted terms which specify that if the employee fails a drug and alcohol test, they are deemed unfit for work and won’t be entitled to any payment
Many more custom terms unique to your business
Workplace Policies
Workplace policies are essential for a business. They serve a number of purposes including helping:
Employees understand what is expected of them and the appropriate steps that they need to follow
Protect businesses from claims including bullying, discrimination and sexual harassment claims.
Properly drafted, workplace policies bind employees as lawful and reasonable directions, without becoming terms of the contract that the employee could sue the business for breaching. Whether that works depends on how the contract refers to the policies, so the drafting matters: a contract that says the employer must follow its policies can make them enforceable against the business.
Policies deal with a vast array of issues, including:
IT use including social media
Permitted leave
Anti-discrimination
Conflict of interest
Drug and alcohol policy
Grievance and dispute resolution
Anti-harassment and anti-bullying
Performance management policy
Other customised policies the business requires to undertake successful operations
Protection From Discrimination, Harassment & Other Claims
A well-drafted policy clearly sets expectations for employees. These expectations deal with issues such as making it clear to the employee that the business does not tolerate any discrimination, sexual harassment or bullying. The policies will also help explain and give examples of what constitutes this type of conduct.
The policy should also have procedures in place on what an employee should do if they feel that they’ve been discriminated against, harassed or bullied. This is essential because a business can be liable for the sexual harassment or discriminatory acts of its employees if it didn’t take reasonable steps to prevent that conduct from happening in the first place.
Having well-drafted policies is one of the steps normally required for a business to prove to the court that it took reasonable steps to stop this behaviour from happening. There are other expectations on the business such as ensuring that negative behaviour is properly dealt with and providing ongoing training to staff about these issues.
Employers now also have a positive duty under the Sex Discrimination Act 1984 (Cth) to take reasonable and proportionate measures to eliminate sexual harassment, sex discrimination and related conduct, as far as possible. Policies, training, reporting channels and prompt action on complaints are part of meeting that duty. Workplace health and safety laws, including the Work Health and Safety Act 2020 (WA), also require psychosocial hazards to be managed.
Case studies
How the law played out in real cases
Supreme Court of Western Australia · 24 February 2025
He joined a competitor, and a week later a court restrained him
Majors Group Australasia Pty Ltd v Ghiringhelli
Temporary injunction on narrower termsRead the case studyGuide · first published October 2016
Cameras at work in WA: when is filming staff lawful?
GuideRead the guide
Published decisions of courts and tribunals, summarised in plain English from the published decision. Every case turns on its own facts.