There’s been a flurry of discussion in the past week following the current Labor government’s announcement that it would abolish non-compete clauses for employees earning under the High Income Threshold, should it win the upcoming election on 3 May 2025. 

While there’s a lot of runway before that proposal could actually take off, some of the discussion for business has focused around the perceived or potential impact a ban would have on a business’ ability to protect its secret herbs and spices.  For example, would a non-compete ban: 

• only apply to working for a competitor, or would it apply to other forms of protection, such as non-solicitation of customers and employees? 

• apply to an being employed by a customer (even if the employee was prevented from soliciting work from the customer)? 

• prevent a group of employees joining together to set up in competition with their prior employer? and

• Could an employee still be restrained (by way of injunction) from working with a competitor where there is threatened or actual misuse of confidential information, or evidence of solicitation of customers? 

Irrespective of whether the non-compete ban will ever become law, it’s good that individual businesses are refocusing on what actually needs to be done to protect their legitimate business interests, including their important relationships, confidential information, the stability of their workforces, and their good will.  In short, there’s little to be lost, and much to be gained by ensuring a tailored and proportionate approach to business protection, and a practical approach to exits. 

One of the more common decisions we see employers make when they learn of an employee proposing to move to a competitor, is to end the employment immediately, pay out the notice period, and walk the employee.  Many businesses cite the need to do this as being driven by an imperative to immediately cut the interactions the employee can have with customers and other employees, and to prevent ongoing access to confidential and business sensitive information.  While it’s understandable that many businesses make this decision, is it really the best, practical option?  

While there will always be exceptions, a more practical and effective approach will often involve: 

• Continuing the employment throughout the full notice period.  If you’re going to have to pay them either way, why not get the benefit of the clear and enforceable protection that comes from the person remaining your employee?   

• Quarantining the employee through a gardening leave period.  If system access and customer contact is a concern, you can usually require the exiting employee to serve their notice period on gardening leave, with their system access suspended.  In doing this, you retain all the controls associated with being their employer, and you’ll have the comfort of a high degree of certainty around what the employee is, and isn’t, doing during that period. 

• If your contracts are well-drafted, this is the time to consider using the provisions which give you the right to:

alter the employee’s duties, including to remove those that might continue to expose the employee to those aspects of your business which are the source of your concern (e.g., confidential information, important client relationships, tenders, supplier negotiations etc); 

require the employee to perform different duties; 

move the employee to a different role; and  

appoint a new employee into the now vacant role (and allowing that employee to begin connecting and building a relationship with your customers etc). 

By actively managing the notice period of a departing employee, you’re at very least: 

• creating the opportunity to take real steps to begin protecting your business; 

• using the time to begin securing important relationships; and 

• giving yourself some space to make informed decisions about the post-employment restrictions, 

while ensuring that the departing employee is sitting on the bench.