Your business requires protection from the consequences of potential adverse conduct of employees.

A range of terms can be included in employment contracts with the aim of protecting your businesses interests both during and after employment ends.

Secondary employment

Include a term requiring exclusive service to prevent the executive, without prior written approval, undertaking ‘secondary employment’ where such employment would have an adverse impact on the employer’s business.

Require your senior employees to:

  • provide exclusive service to your business, and to devote their entire time and attention to performance of their role, unless they have your prior written consent; and
  • refrain from being engaged (either during or outside usual work hours), in any capacity, by another business if this would either conflict or complete with your business or otherwise interfere with the employees ability to properly perform their duties.

Confidential Information and Intellectual Property

Include a term in the employment contract to protect your business from misuse of your confidential information and IP. They are your businesses assets and need protection. The term should:

  • assert ownership of the confidential information and the intellectual property; and
  • impose an obligation on the employee not to, without prior consent, disclose, use or produce the confidential information or intellectual property for any purpose outside their employment.

Conflicts of interest

Include a term in all executive employment contracts:

  • that the executive must not act in conflict with or contrary to the employer’s interest; and
  • requiring the employee to immediately disclose any conflict of interest.

Restraint of trade

To be effective, the restraint cannot be wider than is reasonably necessary to protect your legitimate business interests. A restraint of trade clause will prohibit the employee from soliciting your clients, customers, suppliers and employees for a specified period and within a specified geographical area after their employment ends. Careful drafting is required as these clauses are often found unenforceable when tested by the courts.

You should seek advice when preparing employment contracts, particularly for key employees. For a confidential discussion call Tracey.

Partnering with you. Protecting your rights, business and your brand.

This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this update to specific issues or transactions. For more information or specific advice on your circumstances please contact tracey@robinsonnielsen.com.au.