You resigned properly, worked your notice, handed back the laptop. Three weeks into the new role, a letter arrives from your old employer’s lawyers: you are in breach of clause 17, you must “immediately cease” working for a competitor within 50 kilometres for 12 months, provide undertakings within 7 days, and they “reserve all rights” including an injunction and damages. Your new employer has been copied in. Your new manager wants to know what’s going on.
Take a breath. The starting point in Australian law is that a restraint of trade is void. It becomes enforceable only if the employer proves it goes no further than reasonably necessary to protect a legitimate business interest. Most post-employment non-competes fail that test. The letter is designed to make you resign before anyone tests it. The right response is a written one that says why the restraint doesn’t bind you, what you will honour, and what happens if they interfere with your new job.
Your rights
- Restraints are presumptively void. At common law (the High Court in Buckley v Tutty (1971) and the cases that follow it), a restraint of trade is contrary to public policy and unenforceable unless the party relying on it shows it is reasonable in the interests of the parties and the public.
- The onus is on the employer. They must identify a legitimate protectable interest: confidential information, customer connections you built at their expense, or the stability of their workforce. Merely stopping you competing, or protecting themselves from your skill and experience, is not a legitimate interest.
- Reasonableness is tested at the date of the contract and looks at duration, geographic area, the activities restrained, your seniority and client contact, and whether a narrower restraint would have done the job. A 12-month, state-wide, all-competitors restraint on a mid-level employee is very hard to justify.
- Confidential information and non-solicitation are different. The duty not to misuse confidential information exists regardless of any clause, and a reasonable non-solicit of clients you dealt with is more likely to be upheld than a non-compete. You can honour those and still contest the non-compete.
- Employer breach can end the restraint. If the employer repudiated the contract (for example, by not paying what it owed, or a significant unilateral change) and you accepted that repudiation, the restraint may fall with the contract.
- The federal ban is coming. The Commonwealth has committed to banning non-compete clauses for workers earning under the Fair Work Act high-income threshold, slated for 2027 and prospective. Until it commences it doesn’t rewrite the clause in front of you, but it signals how courts and employers are treating these clauses now.
By state
The common-law test is the same everywhere. One statute changes how it’s applied:
- New South Wales. The Restraints of Trade Act 1976 (s 4) lets a court read a restraint down and enforce it “to the extent” it is reasonable, rather than striking it out entirely. A too-wide New South Wales restraint can survive in a narrower form, so your response should address what a reasonable version would look like, not just argue the clause is void.
- Victoria. Common law only: the court enforces the clause as written if reasonable, or not at all. Employers use “cascading” clauses (12/6/3 months; 50/20/5 km) so a court can sever the wide options; challenge the widest and argue that even the narrowest goes too far.
- Queensland. Common law only; all-or-nothing, with severance of cascading alternatives.
- Western Australia. Common law only; all-or-nothing, with severance of cascading alternatives.
- South Australia. Common law only; all-or-nothing, with severance of cascading alternatives.
- Tasmania. Common law only; all-or-nothing, with severance of cascading alternatives.
- Australian Capital Territory. Common law only; all-or-nothing, with severance of cascading alternatives.
- Northern Territory. Common law only; all-or-nothing, with severance of cascading alternatives.
The governing-law clause in your contract may pick a state other than the one you work in. The Claim Done document asks your state first and drafts the response to the New South Wales read-down rule or the common-law position accordingly.
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What to do right now
- Don’t resign, and don’t sign the undertakings. Both are exactly what the letter is for. Nothing in it is a court order.
- Get the contract and read the actual clause. Duration, area, restrained activities, cascading options, definitions of “competitor” and “client”. Check whether the contract you signed is the one they’re relying on; restraints in a later “updated” contract you never signed don’t bind you.
- Write down what you actually do in the new role and what you had access to in the old one. A different customer segment, a different product line, or no client-facing role is often the end of the argument.
- Isolate the confidential information issue. Confirm you took nothing: no client lists, no pricing, no files. If you emailed anything to yourself, delete it and say so; that issue is the one that turns letters into injunctions.
- Respond in writing within their deadline. Deny breach, put them to proof of a legitimate interest and of reasonableness, offer the undertakings you can honestly give (confidentiality; no solicitation of named clients if that’s true), and state that any contact with your new employer designed to procure your dismissal will be treated as unlawful interference with your contract.
Why most of these letters go nowhere
An injunction requires the employer to go to court, prove a serious question to be tried, show the balance of convenience favours stopping you working, and give an undertaking as to damages. That costs real money, quickly, and exposes the clause to a judge. Employers send the letter because it’s cheap and often works on its own. A response that is calm, legally literate and doesn’t blink changes the calculus: the cheap option has failed and the expensive one is uncertain. The one thing that reliably keeps them going is evidence you took confidential material, which is why that question comes first.
Who to complain to
This is a private contract dispute, so there is no regulator to complain to. The Fair Work Ombudsman can help if the same employer is withholding final pay or entitlements (a repudiation point). If your new employer receives threats, its own lawyers will usually want to see your response; give it to them. If the old employer sues, it will be in your state’s Supreme or District Court, and you file a defence contesting reasonableness.
Get the response drafted — $49
Stop reading. Start doing. Claim Done drafts your Restraint of Trade Response: why the restraint is unenforceable on the facts, the employer’s onus and the legitimate-interest test, the New South Wales read-down or common-law position for your state, the undertakings you will honour (confidentiality, and non-solicitation if appropriate), a request that the demand be withdrawn, and notice that interference with your new employment will be treated as actionable.
Respond to the Non-Compete Letter — $49 →
You review every word before it’s sent.
What happens when you put it in writing — properly
Same problem. What a prepared case looks like.