Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Competition is healthy - but there’s a line between winning new business and unlawfully poaching clients.
As a small business owner, you might worry about a former employee soliciting your customers, or you could be hiring someone from a competitor and wondering what you can and can’t do.
In Australia, whether “poaching” is illegal depends on the circumstances. The key issues are contracts (like restraint and confidentiality clauses), confidential information, and misleading conduct.
Below, we walk through when poaching crosses the line, how to protect your client base, and how to compete lawfully without risking a dispute.
What Does “Poaching Clients” Mean In Australia?
“Poaching clients” generally refers to approaching and trying to win the customers of another business, especially when a former employee or contractor uses inside knowledge to target those clients.
On its own, contacting someone else’s customers isn’t automatically illegal. In a free market, clients can choose who they deal with and competitors are allowed to market their services.
However, problems arise if someone:
- Breaches a contract (for example, a non-solicitation or non-compete clause)
- Misuses confidential information (like pricing, proposals, or client lists)
- Engages in misleading or deceptive conduct under the Australian Consumer Law (ACL)
- Induces others to breach their contracts or legal duties
- Breaches privacy or unsolicited contact rules when using client data
Understanding these boundaries helps you compete fairly - and protect your hard-won customer relationships.
Is Poaching Clients Illegal For Businesses?
Poaching becomes unlawful when it involves a legal wrong. The most common issues are:
- Breach of restraint of trade: If a former employee or contractor agreed not to solicit or deal with your clients for a limited time and within a reasonable area, actively contacting those clients could breach the restraint.
- Misuse of confidential information: Using non-public client lists, margins, strategies or proposal templates to target customers can be unlawful.
- Misleading or deceptive conduct: Telling clients false or half-true things about your business or a competitor (e.g. “they’re going bankrupt”) can breach the ACL.
- Inducing breach: Encouraging someone to break their contract (for example, a key supplier under exclusivity, or an employee breaching their restraint) can create liability.
- Privacy breaches: Exporting or using personal information from a CRM without permission may breach privacy obligations.
On the flip side, general marketing to the wider market, using publicly available information, or accepting approaches from clients (without solicitation) is usually lawful.
When Can You Stop Former Staff Or Contractors From Soliciting Your Clients?
If you want to stop ex-staff or contractors from taking clients, the law will look at the agreements you have in place and the information they are using. The main tools are outlined below.
Restraint Of Trade Clauses (Non-Solicit, Non-Deal And Non-Compete)
Restraints can restrict someone from soliciting or dealing with your clients for a limited period and area after they leave. Non-compete clauses (preventing a person from working in a rival business) are harder to enforce, but non-solicitation and non-dealing clauses are commonly upheld if they’re reasonable.
The court will consider whether the restraint protects a legitimate business interest (like your client connections or confidential know‑how), and whether its scope (time, geography, activities) goes no further than necessary.
Well-drafted restraints should be tailored and use “cascading” options so at least a reasonable version can be enforced if challenged. If you need help tightening your restraints, consider dedicated Non-Compete Agreement terms and getting specific Restraint of Trade Advice.
Confidential Information And Trade Secrets
Even without a restraint, ex-staff can’t use your confidential information for their own benefit. That includes non-public client lists, buying patterns, trade margins, playbooks and proposal templates.
To strengthen your position, identify what is confidential, mark it clearly, limit access on a need-to-know basis, and ensure your contracts include strong confidentiality clauses (or stand‑alone NDAs). For sensitive projects or negotiations, use a Non-Disclosure Agreement.
Who Owns The Client List?
Ownership of client data usually follows the business - not the individual who worked on the account. Make sure your contracts say client records and communications are company property, and require return (and deletion) on exit.
If someone exports your CRM, that could be a misuse of confidential information and a breach of contract. You may be able to demand immediate return, deletion, undertakings not to use the data, and compensation for losses.
Misleading Or Deceptive Conduct (ACL)
Under the Australian Consumer Law (section 18), businesses must not engage in conduct that is misleading or deceptive (or likely to mislead). This applies to statements made when trying to win clients away from a competitor - for example, exaggerating your capabilities or making false claims about the other business.
A breach can lead to serious consequences. Build your sales materials and scripts to comply with section 18 ACL.
Privacy And Contact Rules
If you’re using personal information taken from a previous employer’s systems, you may be breaching contract and privacy obligations. Even within your own business, you’ll need a clear Privacy Policy explaining how you collect and use customer data, and you should follow your own rules consistently.
Always check consent and unsubscribe requirements before sending marketing communications to any individual.
Garden Leave And Exit Controls
Sometimes, keeping a departing employee away from clients and systems during their notice period (with pay) helps protect relationships and information. This is known as garden leave, and it should be supported by your contract terms. You can learn more in our guide to garden leave.
How To Reduce The Risk: Practical Steps For Small Businesses
You can’t stop competition, but you can make it much harder for someone to walk out with your clients.
Put The Right Contracts In Place
- Employment contracts: Include tailored confidentiality, IP ownership, notice, garden leave and reasonable restraint clauses. If you’re hiring, use a clear Employment Contract rather than relying on informal offers.
- Contractor agreements: Contractors often have more freedom, so spell out confidentiality, IP, and non-solicit terms in your Contractors Agreement.
- NDAs and project-specific confidentiality: For sensitive data or sales pipelines, back up your employment terms with a targeted Non-Disclosure Agreement.
Harden Your Information Practices
- Classify confidential information and mark it clearly
- Limit access (principle of least privilege)
- Use offboarding checklists to revoke access and require return/deletion
- Keep an audit trail for downloads and exports
Manage Departures Carefully
- Remind the person of their ongoing obligations (confidentiality and restraint)
- Collect company devices and confirm deletion of data from personal devices
- Consider paid garden leave during notice for key roles
- Reassign and communicate with clients early to maintain relationships
Train Your Team
Include confidentiality and fair competition in onboarding and regular training. Make it clear that client data is company property and must not be exported or used for personal gain.
Consider A Graduated Restraint Strategy
Restraints should be proportionate: shorter periods for junior roles, tighter clauses for senior relationship owners. Use cascading timeframes (for example, 12/9/6/3 months) so at least a reasonable period can be enforced.
What If A Competitor Is Poaching Your Clients Right Now?
Act promptly but methodically. Your first goal is to stop the damage, then resolve the dispute commercially if you can.
- Gather evidence: Save emails, screenshots, call notes, and client reports showing who contacted whom, when, and with what information.
- Review contracts and policies: Check the person’s contract, restraint terms, confidentiality clauses, and any NDAs. Look for obligations to return/delete information.
- Assess the conduct: Did they solicit or did the client approach them? Are they using your confidential information? Is any claim misleading or deceptive?
- Send a letter: A measured cease and desist can demand stops to solicitation, return/deletion of data, and undertakings.
- Consider interim measures: If urgent, you might seek an injunction to prevent ongoing misuse - legal advice is essential here.
- Negotiate a commercial solution: In many cases, practical arrangements (for example, non-dealing with specific clients for a period) resolve the issue faster than litigation.
If the matter escalates, tailored Restraint of Trade Advice can help you gauge enforceability and the best strategy.
How To Compete Lawfully For Clients
You can (and should) compete for work - just do it on the right side of the line.
- Do focus on your value proposition, public marketing, and open tenders
- Don’t encourage someone to breach a contract or confidentiality duty
- Do rely on publicly available information and your own networks
- Don’t take or use another business’ client list, pricing, or playbooks
- Do ensure claims are accurate to avoid breaching the ACL
- Don’t mislead customers about a competitor’s capabilities or status
If you’re recruiting a person from a competitor, ask them for a copy of any restraints and plan their role carefully to avoid inducement or breach. If needed, build “quarantine” tasks until their restraints expire and record your steps to show you acted responsibly.
What Legal Documents Should You Have In Place?
The right contracts and policies make client protection much easier to enforce. Consider the following:
- Employment Contract: Sets clear confidentiality, IP ownership, notice, garden leave, and reasonable restraint terms. Use a tailored Employment Contract for each role.
- Contractors Agreement: Ensures contractors can’t keep or use your client data, and includes non-solicit obligations where appropriate via your Contractors Agreement.
- Non-Disclosure Agreement (NDA): Protects sensitive information during projects, pitches or partnerships. A stand‑alone Non-Disclosure Agreement is quick to deploy.
- Non-Compete/Non-Solicit Terms: Well‑drafted restraints help shield your client relationships and pipelines; review your Non-Compete Agreement wording regularly.
- Workplace Policies: Reinforce confidentiality, acceptable use, and offboarding processes, so your team knows the rules in practice.
- Privacy Policy: Explains how you collect and use customer data and helps ensure you handle personal information lawfully; publish and follow your Privacy Policy.
Not every business needs every document, but most businesses benefit from several of the above. If you’re unsure what fits your risk profile, getting tailored advice early can save you from bigger problems later.
Key Takeaways
- Poaching clients is not automatically illegal in Australia - it becomes unlawful when it involves breaching restraints, misusing confidential information, or misleading customers.
- Reasonable non-solicit and non-dealing clauses are the most enforceable tools to protect your client relationships; ensure your contracts include tailored restraint wording.
- Confidential information and client data belong to the business; exporting or using it after exit can trigger strong legal remedies.
- Build compliant sales processes to avoid breaching the Australian Consumer Law and ensure you respect privacy and contact rules.
- Harden your practices: strong contracts, clear policies, access controls, training, and disciplined offboarding reduce the risk of client loss.
- If a competitor is targeting your clients now, collect evidence, review obligations, and act quickly - a measured legal response can stop the damage and resolve the dispute.
If you’d like a consultation on protecting your client relationships and setting up lawful restraints and confidentiality across your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
