Employment Contract Review For Founders And Senior Hires

Yes, getting an employment contract review before you sign can be worth it, especially if the role involves senior responsibilities, equity, bonuses, confidential information, restraints or a move away from your own business.

This guide is written for founders, business owners, executives and senior hires whose employment contract may affect existing business interests, IP, clients, equity or governance obligations. It isn't a general guide to every employee's rights. The focus is on the commercial issues that can matter when your personal role and your business interests overlap.

The nuance is that not every clause carries the same risk. Some terms are standard, some are negotiable, and some can quietly limit what you can do next if the role doesn't work out.

If you're a founder joining another company, a business owner moving into an executive role, or a senior hire with industry relationships, it's worth slowing down before you sign. A short review now can help you protect your income, your IP, your existing clients and your future options.

Do You Need An Employment Contract Review Before Signing?

It depends, but you should strongly consider a review if the contract affects your current business interests, future work options or significant remuneration.

When you review an employment contract in Australia, you're not just checking whether the salary figure is right. You're checking how the contract works under the Fair Work Act 2009, the National Employment Standards and the commercial deal you've been offered.

A new job contract review is especially useful for founders, business owners and senior hires where the contract includes:

• Restraint clauses that could stop you working with competitors, clients or staff after leaving
• IP clauses that may capture your side projects, inventions, code, content or business ideas
• Bonus or commission terms that sound generous but are discretionary or easy to lose
• Equity or options that sit in a separate plan, shareholders agreement or option deed
• Long notice periods or garden leave that could delay your next commercial move
• Confidentiality obligations that may overlap with information from your own business or previous roles

For example, say Mike runs a small marketing consultancy in Adelaide and is offered a Head of Growth role with a larger agency. The employment contract says the company owns all IP Mike creates during employment, whether or not it's created during work hours. Without a carve-out, that could create confusion over Mike's existing templates, processes and client materials. A review can flag that before he signs.

Can Your Employer Stop You From Working For A Competitor?

Sometimes, but not always. In Australia, restraint clauses are usually only enforceable if they're reasonable and protect a legitimate business interest.

Common restraint clauses include:

• Non-compete clauses: stopping you from working for or starting a competing business
• Non-solicitation clauses: stopping you from approaching clients, customers, suppliers or staff
• Non-dealing clauses: stopping you from doing business with certain clients even if they approach you
• Confidentiality clauses: stopping you using or disclosing confidential information

A restraint is more likely to be a problem if it's broad. Watch for terms that cover all of Australia, all customers of the company, all types of competing work, or a long period such as 12 or 24 months.

In New South Wales, the Restraints of Trade Act 1976 can allow a court to read down an unreasonable restraint in some cases. In other states and territories, common law principles do much of the work. Either way, you don't want to rely on a future dispute to find out what a clause means.

There has also been serious federal attention on non-compete clauses in recent years, including proposed reforms aimed at limiting their use for lower-paid workers. That reform direction is worth watching, but if you're signing now as a founder, executive or senior hire, you should still treat the clause as something that could affect your next move, your existing business or your client relationships.

A practical negotiation might be to narrow the restraint to:

• clients you personally dealt with in the last 6 or 12 months
• a shorter period, such as 3 or 6 months instead of 12 months
• a specific business line, rather than the whole industry
• a defined territory where the employer actually operates

What Should You Check In Pay, Bonus And Equity Clauses?

You should check whether the contract clearly states what you're entitled to, what is discretionary, and what you lose if you resign or are terminated.

Your base salary should be clear, including whether it's inclusive or exclusive of superannuation. The superannuation guarantee rate is 12% from 1 July 2025, so a salary package that's inclusive of super leaves less as cash salary than a salary plus super arrangement.

You should also check whether the contract reflects any minimum entitlements under the National Employment Standards, including:

• 4 weeks of paid annual leave for full-time employees, with shift workers potentially entitled to 5 weeks
• 10 days of paid personal/carer's leave per year for full-time employees
• Minimum notice of termination from 1 to 4 weeks depending on length of service, plus an extra week if you're over 45 and have at least 2 years of service

For bonuses and commissions, look closely at the wording. A clause that says a bonus is entirely discretionary is very different from a clause that says you'll receive a specific amount if measurable targets are met.

For equity, don't rely only on the employment contract. Ask for the documents that actually govern the shares, options or performance rights. These may include:

• an employee share option plan
• an option deed or offer letter
• a shareholders agreement
• the company constitution
• vesting schedules and leaver provisions

The key question is what happens if you leave. If your options vest over 4 years with a 12 month cliff, leaving after 11 months may mean you receive nothing. If you're giving up existing income, clients or founder upside to take the role, that detail matters.

What Should Founders And Senior Hires Look For?

Founders and senior hires should look beyond the basic employment terms and check how the contract affects existing IP, side projects, directorships, client relationships and future fundraising plans.

An executive employment contract review often needs a wider lens because senior roles usually come with broader obligations. You may be asked to sign warranties, conflict of interest obligations, post-employment restraints and confidentiality terms that are much heavier than a standard employee contract.

Worked Example: Priya's CTO Offer

Priya runs a small SaaS consultancy in Melbourne under her own company. She is offered a CTO role at a startup on a $220,000 package plus options. The contract includes a 12 month non-compete across Australia, a 6 month non-solicitation clause, and an IP clause covering anything she creates while employed.

On review, three issues stand out:

• The non-compete could stop Priya from taking SaaS advisory work if the startup role ends
• The IP clause could accidentally capture tools and code libraries Priya already uses in her consultancy
• The option offer refers to a plan, but the plan says unvested options lapse immediately if she resigns

Priya negotiates before signing. The non-compete is removed, the non-solicitation clause is narrowed to clients she personally deals with during the last 6 months of employment, and the IP clause includes a schedule of her pre-existing tools and side projects. She also receives the option plan and confirms the vesting rules before accepting.

That's the value of checking the contract before the relationship starts. You're not being difficult. You're making sure everyone is clear on the deal.

What Does An Employment Contract Lawyer Actually Do?

An employment contract lawyer checks the legal risk, explains the commercial impact, and helps you decide what to negotiate before you sign.

For founders, business owners and executives, a useful review should give you more than a list of legal comments. It should help you understand which clauses are standard, which are risky, and which are worth pushing back on because they affect your company, IP, client base, equity or governance obligations.

A typical employment contract review for this type of senior or founder role might cover:

• whether the contract meets minimum Fair Work Act and National Employment Standards requirements
• how the role description affects your duties and performance expectations
• whether restraints are too broad for your industry and role
• whether IP clauses need carve-outs for existing work or side projects
• whether confidential information is defined sensibly
• how bonuses, commissions, options and incentives are earned and lost
• termination rights, notice periods, garden leave and payment in lieu of notice where they affect commercial planning
• director or officer duties if you're also joining the board or taking a company office

The cost of a review usually depends on the length and complexity of the contract, how quickly you need advice, whether there are related documents, and whether you want help negotiating changes.

Your options generally look like this:

• Free template or self-review: low cost, but easy to miss restraints, IP issues or equity traps
• Online fixed-fee legal review: clearer scope and upfront pricing, useful when you want practical comments and negotiation points
• Traditional hourly billing: can suit complex executive packages, but the final cost may be less predictable

If you're using a lawyer, ask what is included. Ideally, you'll receive a plain-English summary, marked-up comments or negotiation points, and a chance to ask follow-up questions.

Employment Contract Review Checklist Before You Sign

You should check the clauses that affect money, control, risk and future opportunities before you sign.

Use this checklist to prepare for your review. It isn't a finished legal document, and a lawyer should tailor the comments to your role, industry and existing business interests before you rely on them.

Fill-In Review Outline

1. Parties And Role: write the correct legal names, position title, reporting line and whether you hold any director or officer role.
2. Start Date And Probation: note the start date, probation length and what notice applies during probation.
3. Salary And Superannuation: state whether the package is inclusive or exclusive of super and how often you'll be paid.
4. Bonus, Commission Or Equity: attach the rules, targets, vesting dates and what happens if you leave.
5. Duties And Location: describe the role, flexibility, travel expectations and any power to change your duties or workplace.
6. Leave And NES Entitlements: check that annual leave, personal leave and other minimum entitlements aren't reduced.
7. IP And Moral Rights: list any pre-existing IP, side projects, content, software, designs or inventions that need to be carved out.
8. Confidential Information: check what information is covered and whether it overlaps with information from your existing business.
9. Restraints: record the restricted activities, clients, territory and time periods, then narrow anything too broad.
10. Termination And Garden Leave: check notice, payment in lieu, garden leave and what happens to bonus or equity on exit.

Before signing, also make sure you have every related document. Employment contracts often point to policies, incentive plans, share plans or confidentiality agreements. If those documents can change without your consent, ask how that affects the commercial deal.

If something doesn't match what you were promised verbally, raise it before signing. Written terms usually carry much more weight than a conversation or email exchange.

Key Takeaways

• An employment contract review can help founders, business owners and senior hires spot clauses that may affect income, IP, side projects and future work options.
• Restraints are worth checking carefully, especially non-compete, non-solicitation and non-dealing clauses.
• Bonus, commission and equity terms should be clear about when you earn the benefit and what happens if you leave.
• Founders and senior hires should pay close attention to IP carve-outs, conflicts, directorships and existing client relationships.
• A good review should give you practical negotiation points, not just legal theory.
• Templates and checklists can help you prepare, but tailored advice is usually best before signing an important contract.

If you'd like help with founder or executive employment contract reviews, negotiating restraint clauses, checking equity terms or protecting existing business IP, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.