UK businesses advised to review contracts

UK businesses that operate in Australia are being advised to assess their employment contracts in light of new legislative changes aimed at non-compete clauses. According to Roger Lewis, an employment specialist at arch.law in Australia, shifts in Australian law could significantly impact existing contractual agreements. The Australian Government has announced plans to ban non-compete clauses for employees earning below the Fair Work Act high-income threshold, currently set at $183,100 excluding superannuation.

These proposed reforms are particularly crucial as they are expected to apply retrospectively, which means that non-compete clauses currently in place affecting lower-paid employees could soon lose their legal standing. Lewis emphasised that UK-headquartered organisations with subsidiaries or offices in Australia must not overlook their Australian contracts during broader employment risk and compliance evaluations. He stated, "Many international businesses operate using standardised employment contracts across multiple jurisdictions. The proposed Australian reforms are a reminder that local employment laws can have a significant impact on the effectiveness of contractual protections."

Businesses need to critically assess whether their Australian contracts depend heavily on non-compete provisions. Lewis suggested that organisations should also evaluate the appropriateness of other protective measures such as confidentiality and non-solicitation agreements to ensure robust compliance with emerging laws. "For organisations with operations in both the UK and Australia, it is important not to assume that restrictions which remain enforceable in one jurisdiction will necessarily be effective in another."

To navigate this complex landscape, Lewis recommended that HR teams, legal advisers, and business leaders proactively begin to assess potential risks and exposures well in advance of the implementation of any new legislation.