{ "type": "practice-guide", "canonical": "https://openagreements.org/practice-guides/non-compete/au/south-australia", "links": [ { "rel": "self", "href": "https://openagreements.org/practice-guides/non-compete/au/south-australia.json", "type": "application/json" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/au/south-australia", "type": "text/html" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/au/south-australia/markdown", "type": "text/markdown" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/au/south-australia/json", "type": "application/json" } ], "data": { "topic": "non-compete", "state": "south-australia", "frontmatter": { "title": "Non-Compete Enforceability in South Australia", "description": "In South Australia a post-employment non-compete is presumptively void as a restraint of trade and binds a former employee only so far as it is reasonable; South Australia has no statutory read-down power, so courts apply the common-law blue-pencil rule only — they can delete severable words but cannot rewrite an overbroad clause, and a clause that severance cannot save fails entirely.", "state": "South Australia, Australia", "country_code": "AU", "lastReviewed": "2026-06-10", "license": "CC BY 4.0", "authors": [ "steven-obiajulu" ], "summary": { "enforceability": "reasonable", "bottomLine": "A South Australian non-compete is presumptively void and binds a former employee only so far as it is reasonable to protect a legitimate interest; there is no statutory read-down power, so a court can only strike out grammatically severable words under the blue-pencil rule and an overbroad clause that severance cannot save fails entirely.", "keyLaw": "Common-law restraint of trade (no equivalent of the NSW Restraints of Trade Act 1976)", "exceptions": "Sale-of-business covenants are judged more leniently; a proposed federal ban would, if enacted, cover most employees earning under the Fair Work Act high-income threshold (with sale-of-business and above-threshold restraints reported to be excluded), but it is not yet law.", "courtNarrowing": "trimOnly", "appliesToContractors": "yes", "extendedForBreach": "Untested; reasonableness is fixed at the date of contract, and no South Australian authority validates extending a restraint because of a breach.", "maxLength": "No statutory cap; reasonableness is judged case by case by reference to the time needed to break the customer connection (a 12-month restraint was upheld in International Cleaning Services v Dmytrenko).", "noticeRequirement": "None", "saleOfBusiness": "Sale covenants judged less strictly than employee restraints", "customerNonSolicit": "Client solicitation/dealing in sale context", "employeeNonSolicit": "Staff enticement in sale context" }, "about": [ "South Australia non-compete agreements", "South Australia restraint of trade clauses", "South Australia blue-pencil severance restraint", "cascading restraint clause South Australia", "South Australia no statutory read-down restraint of trade", "Richmond v Moore Stephens cascading restraint", "International Cleaning Services v Dmytrenko severance", "N P Generations v Feneley confidential information", "Lindner v Murdock's Garage reasonableness", "Australia proposed non-compete ban" ], "eyebrow": "South Australia · Australia Law Practice Guide" }, "questions": [ { "slug": "enforceability", "label": "Are non-competes enforceable?", "heading": "Are employee non-competes enforceable in South Australia?", "answerText": "Only so far as they are reasonable. A post-employment non-compete is treated as a restraint of trade, which the courts presume is void as contrary to public policy unless the party enforcing it shows that, in the particular circumstances, the restraint is reasonable. The onus sits squarely on the employer: it must demonstrate a legitimate interest and show that the restraint goes no further than is necessary to protect that interest.", "sources": [ { "id": "dmytrenko-presumed-void", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "A restraint of trade is contrary to public policy and void at common law unless it is shown to be reasonable in the particular circumstances of the case.", "verbatimQuote": "At common law a restraint of trade is contrary to public policy and void unless it can be shown that the restraint is, in the particular circumstances of the case, reasonable.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-presumed-void" }, { "id": "hydron-onus", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hydron Pty Ltd v Harous", "citation": "Hydron Pty Ltd v Harous [2005] SASC 176 (Bleby J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2005/176.html", "proposition": "The party enforcing a restraint bears the onus of demonstrating a legitimate interest and that the extent of the restraint goes no further than necessary to protect that interest.", "verbatimQuote": "In any event, Hydron bears the onus of demonstrating that the restraint is to protect a legitimate interest of itself, and that the extent of the restraint goes no further than is necessary to protect that interest.", "date": "2005-05-17", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-hydron-onus" }, { "id": "lindner-onus", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "The employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable.", "verbatimQuote": "The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-lindner-onus" }, { "id": "dmytrenko-stricter-view", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "Covenants in restraint of trade in employment contracts are scrutinised more strictly than those in contracts for the sale of a business.", "verbatimQuote": "A stricter view is taken of covenants in restraint of trade in employment contracts than those contained in contracts for the sale of a business.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-stricter-view" } ] }, { "slug": "court-narrowing", "label": "Can a court narrow an overbroad clause?", "heading": "Can a South Australian court narrow an overbroad non-compete?", "answerText": "Only in a limited way, and far less generously than many employers assume. South Australia has no statute that lets a court read an overbroad restraint down to a reasonable level. A court applies the common-law blue-pencil rule only: it can delete severable words if what remains is reasonable, but it cannot read down, add to, or rewrite the clause. If the restraint confers greater protection than can be justified, it is unreasonable and unenforceable, and if severance cannot save it the whole restraint fails.", "sources": [ { "id": "dmytrenko-greater-protection", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "A restraint that confers greater protection than can be justified is unreasonable and therefore unenforceable.", "verbatimQuote": "If the Court is satisfied that the restraint confers greater protection than can be justified, the restraint will be unreasonable and therefore unenforceable.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-greater-protection" }, { "id": "dmytrenko-blue-pencil", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "Severance of an invalid part of a restraint, so that the balance can be enforced, is the approach sometimes described as the blue pencil rule.", "verbatimQuote": "In the context of these cases that approach is sometimes described as the blue pencil rule.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-blue-pencil" }, { "id": "dmytrenko-severance-worked", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "The covenant as drafted was cast in wider terms than necessary because it extended beyond working in or for a competitor; the court severed the offending words and enforced the remainder.", "verbatimQuote": "In my view, clause 10.8.1 is cast in wider terms than is necessary to protect the applicant's legitimate interests because it seeks to extend beyond working in or for a competitor of the applicant.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-severance-worked" }, { "id": "dmytrenko-destroyer", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "In applying severance to hold the parties to their bargain, the court proceeds on the footing that it should not be the destroyer of bargains.", "verbatimQuote": "The Court should not be the destroyer of bargains.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-destroyer" }, { "id": "hydron-no-rewriting", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hydron Pty Ltd v Harous", "citation": "Hydron Pty Ltd v Harous [2005] SASC 176 (Bleby J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2005/176.html", "proposition": "Severance cannot be used to excise internal parts of a covenant where, without rewriting the covenants, there would be no certainty in what remained.", "verbatimQuote": "Even if this were possible, without rewriting the covenants there would be no certainty when any of the periods commenced.", "date": "2005-05-17", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-hydron-no-rewriting" } ] }, { "slug": "cascading-clauses", "label": "Are cascading or ladder clauses valid?", "heading": "Are cascading or ladder restraint clauses valid in South Australia?", "answerText": "Yes, within limits, and they are essential drafting in South Australia precisely because a court cannot read an overbroad clause down. A cascading clause sets out a menu of progressively narrower combinations of period and area, each expressed as a separate, severable restraint, so that if the widest is unreasonable a narrower rung can still be enforced on its own. The Full Court upheld restraints built exactly this way in Richmond v Moore Stephens Adelaide Pty Ltd, and a ladder clause supported by proper severance provisions is not void for uncertainty where it is a genuine attempt to define the protection needed.", "sources": [ { "id": "richmond-cascading", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "The restraints connected to the sale of an accountancy practice and an associated service agreement operated for cascading periods from three years down to three months within cascading areas from Australia down to 10 kilometres, and were upheld.", "verbatimQuote": "These restraints operate for cascading periods ranging from three years to two years and down to 3 months after termination of the Service Agreement within cascading areas ranging from Australia down to 10 kilometres from the site the Principal carries on business.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-cascading" }, { "id": "richmond-two-years", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "The Full Court found no error in the trial judge's conclusion that a two-year restraint after termination was reasonable in the circumstances of the sale of the practice and the associated service agreement.", "verbatimQuote": "In the circumstances, no error has been demonstrated in the Judge's conclusion that a period of two years after termination comprised a reasonable restraint.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-two-years" }, { "id": "hydron-genuine-attempt", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hydron Pty Ltd v Harous", "citation": "Hydron Pty Ltd v Harous [2005] SASC 176 (Bleby J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2005/176.html", "proposition": "Ladder clauses expressed as separate severable covenants are not void for uncertainty where they are a genuine attempt to define the covenantee's need for protection.", "verbatimQuote": "On their face, the clauses appear to be a genuine attempt to define Hydron's need for protection in respect of the various situations covered by the agreements.", "date": "2005-05-17", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-hydron-genuine-attempt" }, { "id": "hydron-wootten-total-covenant", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hydron Pty Ltd v Harous", "citation": "Hydron Pty Ltd v Harous [2005] SASC 176 (Bleby J), quoting the warning of Wootten J in Austra Tanks Pty Ltd v Running, which Bleby J distinguished on the facts.", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2005/176.html", "proposition": "Bleby J cited Wootten J's warning in Austra Tanks that where variable combinations are not expressed as separate covenants, what is unenforceable is not simply a restraint in respect of an area but a total covenant; Bleby J went on to distinguish that situation from the separately-covenanted clauses before him.", "verbatimQuote": "But it is not simply a restraint in respect of an area which is unenforceable, but a total covenant.", "date": "2005-05-17", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-hydron-wootten-total-covenant" } ] }, { "slug": "legitimate-interest", "label": "What interest must an employer protect?", "heading": "What legitimate interest must an employer show to enforce a South Australian non-compete?", "answerText": "A protectable business interest — not a mere wish to avoid competition. An employer cannot restrain a former employee simply because a rival might benefit; an employer must be prepared to face the competition of a former employee if it comes. The recognised interests are the employer's customer connection and goodwill and its confidential information; the employee's own skill, experience and know-how remain the employee's to use.", "sources": [ { "id": "lindner-face-competition", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "An employer has no protectable interest in freedom from competition by a former employee as such and must be prepared to face that competition; only a recognised interest can support a restraint.", "verbatimQuote": "An employer must be prepared to face the competition of a former employee if it comes.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-lindner-face-competition" }, { "id": "dmytrenko-mere-competition", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "An employer may not protect itself against mere competition, and a former employee may use the skill, experience and know-how acquired in the former employment in legitimate competition.", "verbatimQuote": "An employer is not entitled to protect itself against mere competition by a former employee, and that employee is entitled to use his or her skill, experience and know-how acquired in the service of the former employer in legitimate competition.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-mere-competition" }, { "id": "feneley-address-book", "authorityType": "case-law", "tier": "primary-source-backed", "title": "N P Generations Pty Ltd v Feneley", "citation": "N P Generations Pty Ltd v Feneley [2001] SASC 185 (Debelle J, Williams and Wicks JJ agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2001/185.html", "proposition": "A customer list compiled by the employee from the employer's records for use in the business was confidential, and the employee was obliged to deliver it up on termination.", "verbatimQuote": "Given that the address book was compiled from the appellant's records for use in its business, the respondent was obliged to deliver up the address book once her employment had been terminated.", "date": "2001-06-05", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-feneley-address-book" }, { "id": "feneley-diary", "authorityType": "case-law", "tier": "primary-source-backed", "title": "N P Generations Pty Ltd v Feneley", "citation": "N P Generations Pty Ltd v Feneley [2001] SASC 185 (Debelle J, Williams and Wicks JJ agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2001/185.html", "proposition": "The employee's work diary, reflecting her own general knowledge, skill and experience, was held not to constitute confidential information.", "verbatimQuote": "For these reasons, I do not think that the diary constitutes confidential information.", "date": "2001-06-05", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-feneley-diary" } ] }, { "slug": "reasonableness-factors", "label": "How long and how wide can it be?", "heading": "How long and how wide can a South Australian non-compete be?", "answerText": "There is no statutory limit; reasonableness is decided case by case on the activity restrained, the geographic area, the duration, and the employee's actual customer influence. The restraint must impose no more than adequate protection on the party it favours, it is assessed prospectively as at the date of the agreement rather than with hindsight, and an area wider than the business reasonably requires is fatal.", "sources": [ { "id": "dmytrenko-adequate-protection", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "As between the parties, a restraint must impose no more than adequate protection on the party in whose favour it operates.", "verbatimQuote": "So far as the parties' interests are concerned the restraint must impose no more than adequate protection to a party in whose favour it is imposed.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-adequate-protection" }, { "id": "dmytrenko-twelve-months", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "On the evidence, a 12-month restraint was the period necessary to sever the connection between the former employee and the customers he dealt with, and was therefore reasonable.", "verbatimQuote": "In the circumstances a 12-month restraint is necessary to sever the connection between the respondent and the applicant's customers with whom he dealt.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-twelve-months" }, { "id": "lindner-area-too-wide", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "A restraint whose geographic area is wider than reasonably necessary to protect the employer's business is unreasonable and void; here the area covered was held unreasonably wide.", "verbatimQuote": "I think it must be held that the area was unreasonably wide.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-lindner-area-too-wide" }, { "id": "richmond-prospective", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "The reasonableness of a restraint is assessed prospectively as at the date of the agreement, not retrospectively as at the date of enforcement.", "verbatimQuote": "The reasonableness of the restraint is to be assessed prospectively as at the date of the agreement and not retrospectively as at the date of enforcement.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-prospective" } ] }, { "slug": "garden-leave", "label": "Do paid restraints and garden leave help?", "heading": "Do paid restraints, garden leave, and fresh consideration help in South Australia?", "answerText": "Payment helps but is not required, and garden leave as such has not been squarely tested in the staged South Australian authorities. The Supreme Court has held that the absence of any obligation to pay the former employee during the restraint period does not, of itself, make the restraint unreasonable — payment, where it exists, simply reflects the bargain the parties struck.", "sources": [ { "id": "dmytrenko-no-payment-rule", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "The absence of an obligation to pay the former employee during the restraint period does not render the restraint unreasonable.", "verbatimQuote": "It does not reflect a rule that the absence of payment to the former employee during the restraint period renders the restraint unreasonable.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-no-payment-rule" }, { "id": "dmytrenko-payment-bargain", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "An obligation to pay the former employee during the restraint period generally reflects the bargain struck between the parties rather than a condition of validity.", "verbatimQuote": "Generally, the existence of an obligation to pay the former employee his or her salary during the period of the restraint reflects the terms of the bargain struck between the parties.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-payment-bargain" }, { "id": "dmytrenko-tested-at-contract", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "The validity of a covenant in an employment contract is judged at the date of entry into the contract, which governs how a mid-employment restraint is assessed.", "verbatimQuote": "The validity of the covenant in an employment contract is to be judged at the date of entry into the contract.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-tested-at-contract" } ] }, { "slug": "employer-breach", "label": "What if the employer breached first?", "heading": "What if the employer wrongfully dismissed the employee?", "answerText": "It depends on the contract — South Australia's Full Court has rejected the idea that an employer's breach automatically kills the restraint. In Richmond v Moore Stephens Adelaide Pty Ltd the covenantor argued that the principle in General Billposting Co Ltd v Atkinson laid down a rule of law that a repudiating party can never enforce a post-termination restraint; the Full Court held instead that whether the restraint survives termination depends on the proper construction of the contract. An employer in serious breach can still lose the covenant — but by the route of construction and the facts of termination, not by an automatic rule.", "sources": [ { "id": "richmond-construction", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "There is no rule of law that a repudiating party can never enforce a post-termination restraint; whether the restraint survives termination depends on the proper construction of the contract.", "verbatimQuote": "Mr Richmond's contention should be rejected because the question whether the restraint clause survives must depend on the proper construction of the contract.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-construction" }, { "id": "richmond-repudiation-standard", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "Conduct amounts to repudiation only if a party evinces an unwillingness or inability to render substantial performance of the contract.", "verbatimQuote": "Conduct only amounts to repudiation if a party evinces an unwillingness or inability to render substantial performance of the contract.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-repudiation-standard" }, { "id": "richmond-no-termination", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "On the facts, the covenantee's defaults did not justify termination, so the covenantor and his company were not entitled to terminate and the restraints remained on foot.", "verbatimQuote": "WKYA and Mr Richmond were not entitled to terminate the Business Sale Agreement or the Service Agreement.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-no-termination" } ] }, { "slug": "tolling", "label": "Does the restriction pause or extend during a breach?", "heading": "Does a South Australian non-compete pause or extend if the employee breaches?", "answerText": "This is an open question, and an employer should not assume the clock stops. No settled South Australian authority holds that a restraint period tolls — pauses and then resumes — while a former employee is in breach or while litigation runs. Validity is judged at the date the contract is entered into, which sits uneasily with a clause that purports to lengthen the restraint automatically depending on the employee's later conduct.", "sources": [ { "id": "dmytrenko-tested-at-contract-tolling", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "The validity of a covenant in an employment contract is judged at the date of entry into the contract, which is in tension with a clause that automatically extends the restraint based on the employee's later breach.", "verbatimQuote": "The validity of the covenant in an employment contract is to be judged at the date of entry into the contract.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-tested-at-contract-tolling" } ] }, { "slug": "contractors-and-sale", "label": "Do the rules differ for contractors and business sales?", "heading": "Do South Australian restraint rules differ for contractors and business sales?", "answerText": "Yes, in different directions. Restraints on independent contractors are assessed under the same restraint-of-trade doctrine as employee covenants — in Richmond v Moore Stephens Adelaide Pty Ltd the restraint sat in a service agreement between a principal and a contractor company, and the ordinary reasonableness analysis applied. Restraints given by the seller of a business, by contrast, are judged more leniently, because a buyer is entitled to protect the goodwill it paid for.", "sources": [ { "id": "lindner-sale-distinction", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ, dissenting as to the outcome).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "A distinction is drawn between a restraint in a sale-of-business agreement and a restraint in an employment agreement, with the former treated more favourably.", "verbatimQuote": "A distinction is drawn between a restraint upon trade included in an agreement for the sale of a business and a restraint included in an agreement with an employee.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-lindner-sale-distinction" }, { "id": "lindner-sale-more-easily", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lindner v Murdock's Garage", "citation": "Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ, dissenting as to the outcome).", "url": "https://www.hcourt.gov.au/sites/default/files/eresources/1950/HCA/48.pdf", "proposition": "A restraint is more easily upheld in the sale-of-business context than in the employment context.", "verbatimQuote": "The restraint is more easily upheld in the former than in the latter case.", "date": "1950-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-lindner-sale-more-easily" }, { "id": "hydron-stricter-view", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hydron Pty Ltd v Harous", "citation": "Hydron Pty Ltd v Harous [2005] SASC 176 (Bleby J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2005/176.html", "proposition": "Courts take a stricter and less favourable view of restraint covenants between employer and employee than of such covenants between vendor and purchaser.", "verbatimQuote": "The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between an employer and an employee than of such covenants entered into between a vendor and a purchaser", "date": "2005-05-17", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-hydron-stricter-view" }, { "id": "richmond-overall-circumstances", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Richmond v Moore Stephens Adelaide Pty Ltd", "citation": "Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (Blue J, Kourakis CJ and Stanley J agreeing).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCFC/2015/147.html", "proposition": "Where a business sale agreement and a service agreement are inextricably intertwined, the reasonableness of the restraint in the service agreement is assessed against the overall circumstances of both agreements.", "verbatimQuote": "The Judge was entitled to have regard to the overall circumstances under both agreements in assessing the reasonableness of the restraint clause under the Service Agreement.", "date": "2015-09-29", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-richmond-overall-circumstances" }, { "id": "hydron-goodwill-connection", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Hydron Pty Ltd v Harous", "citation": "Hydron Pty Ltd v Harous [2005] SASC 176 (Bleby J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2005/176.html", "proposition": "Sale-of-business restraints keyed to the end of the seller's later employment, rather than to the transfer of the business, showed no real connection with the protection of the acquired goodwill and were invalid.", "verbatimQuote": "The period specified shows no real connection with the protection of the acquired goodwill of the Nu Contacts business.", "date": "2005-05-17", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-hydron-goodwill-connection" } ] }, { "slug": "federal-reform", "label": "Is a federal non-compete ban coming?", "heading": "Is a federal ban on non-competes coming to Australia?", "answerText": "A ban has been proposed but is not yet law, and as of June 2026 the common-law restraint-of-trade framework above still governs in South Australia. According to Australian Government Treasury material and law-firm commentary, the Government announced in the 2025–26 Federal Budget that it intends to ban post-employment non-competes for workers earning under the Fair Work Act high-income threshold (reported at around AUD $183,100), with Treasury running a consultation on the design, and the reform expected to be legislated during 2026 and to take effect from 2027, operating prospectively. Those figures and dates come from that secondary material — Treasury announcements and commentary — not from any enacted statute. Until any ban is enacted, the existing common-law framework continues to govern.", "sources": [ { "id": "dmytrenko-still-governs", "authorityType": "case-law", "tier": "primary-source-backed", "title": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko", "citation": "International Cleaning Services (Australia) Pty Ltd v Dmytrenko [2020] SASC 222 (Stanley J).", "url": "https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASC/2020/222.html", "proposition": "Under the common-law restraint-of-trade doctrine that currently governs in South Australia, a restraint is void as contrary to public policy unless shown to be reasonable in the particular circumstances.", "verbatimQuote": "At common law a restraint of trade is contrary to public policy and void unless it can be shown that the restraint is, in the particular circumstances of the case, reasonable.", "date": "2020-11-13", "anchor": "https://openagreements.org/practice-guides/non-compete/au/south-australia#src-dmytrenko-still-governs" } ] } ] } }