Management Agreement Template: Essential Clauses To Include In Australia

If you’re bringing in someone to help run your business day-to-day (or you’re stepping into a new partnership where one party “manages” operations), it’s tempting to keep things informal. After all, speed matters when you’re scaling, hiring, launching products, and keeping customers happy.

But when responsibilities blur, money changes hands, or performance expectations aren’t met, a vague arrangement can quickly become a major business risk. This is where a management agreement template can help - not as a “fill in the blanks and forget it” document, but as a starting point to clearly record the deal you’re making.

In this guide, we’ll break down what a management agreement usually covers in Australia, when you might need one, and the key clauses you’ll want to include (and customise) so it actually protects your business. This information is general only and isn’t legal, tax or accounting advice - what you need will depend on your specific structure and circumstances.

What Is A Management Agreement (And When Do You Need One)?

A management agreement is a contract where one party (the “manager”) agrees to manage a business, a part of a business, or a specific project for another party (the “business owner”).

In practice, “management” can mean a lot of things, including:

• overseeing staff and rostering
• managing suppliers and purchasing
• running customer service operations
• handling marketing campaigns or sales pipelines
• managing the financial admin (within agreed limits)
• keeping the business compliant with internal procedures

You might need a management agreement if you’re:

• Hiring an external manager (for example, a consultant or management company) to run operations
• Partnering with another business where one party manages a shared venture
• Engaging someone to manage a location, team, or business line
• Paying performance-based management fees (such as a base fee plus KPI bonuses)

It’s also worth noting a management agreement is not automatically the same thing as an employment contract. A manager could be an employee, a contractor, or a separate company - and that distinction can affect issues like tax treatment, control, intellectual property and risk.

If you’re engaging an individual as an employee (rather than a contractor/service provider), an Employment Contract is often a better fit (or you may need both documents working together, depending on the structure).

Why A “Template” Management Agreement Often Needs Customisation

A template can be useful because it gives you a framework and helps you avoid missing key legal terms. However, the biggest risk with templates is that they can create a false sense of security.

Many disputes happen not because there was no contract, but because the contract didn’t match how the relationship actually worked - and a template isn’t a substitute for legal advice on your specific arrangement.

For example:

• You say the manager is “responsible for running the business”, but you didn’t define what decisions they can make without asking you first.
• You pay “a management fee”, but didn’t define whether it includes GST, reimbursement of expenses, or what happens if performance drops (you may need tax or accounting advice on GST and invoicing in your situation).
• You give access to customer lists and systems, but didn’t set strong confidentiality and IP protections.
• You want the relationship to end quickly if things go wrong, but the termination clause is vague (or doesn’t deal with handover).

The point of using a management agreement (template or otherwise) is to lock in clarity: who does what, who pays what, who owns what, and what happens if the deal ends.

Key Clauses To Include In A Management Agreement Template

Below are the key clauses we typically expect to see in a well-drafted management agreement for Australian small businesses and startups.

1. Parties, Background And Business Description

This is the “who and what” section. It should clearly identify:

• the legal names of the parties (individual, company, or trustee)
• ABN/ACN details where relevant
• the business being managed (including any trading names)
• the commercial context (why the manager is being engaged)

It sounds basic, but mistakes here can cause real problems - especially where a business operates through a company and you accidentally contract with an individual (or the wrong entity).

2. Scope Of Services (The Manager’s Responsibilities)

This is one of the most important clauses in any management agreement.

You’ll want to define the services clearly, including:

• what the manager is responsible for (and what they’re not)
• deliverables (if any) and timelines
• days/hours of availability (if relevant)
• reporting expectations (weekly updates, monthly reports, etc.)
• any requirements to follow your internal policies and procedures

A practical approach is to attach a schedule with a more detailed service list, KPIs, or an operational plan. That way, you can update the schedule without rewriting the entire agreement (as long as the agreement allows it).

3. Authority And Decision-Making Limits

One of the fastest ways for a management relationship to go off-track is unclear authority.

Your management agreement should be clear about:

• what the manager can approve without your consent (for example, purchases under $1,000)
• what always needs your approval (like hiring decisions, key suppliers, pricing changes, signing leases)
• whether the manager can bind your business legally (sign contracts on your behalf)
• whether the manager can deal directly with your bank accounts or payment platforms

If the manager can sign documents for your business, you should consider how signing will be handled and recorded. In some structures, you might also use a separate Letter of authority to set operational boundaries, even if you also cover it in the agreement.

4. Term, Commencement Date And Renewal

Your agreement should state:

• when the agreement starts
• how long it runs (fixed term vs ongoing)
• whether it renews automatically, and on what conditions
• whether there is any “trial period” concept (and what happens at the end of it)

Startups often want flexibility, so it’s common to see shorter initial terms with renewal options. The key is making sure the termination clause (covered below) matches the term structure.

5. Fees, Incentives And Expenses

This clause should spell out exactly how the manager gets paid. Common models include:

• Flat management fee: a fixed monthly amount
• Hourly/day rate: often used for interim management
• Performance-based payments: KPI bonuses or a percentage of revenue/profit
• Hybrid: a base fee plus incentives

At a minimum, your management agreement template should cover:

• whether fees are inclusive or exclusive of GST (your accountant can help confirm the right GST treatment for your circumstances)
• when invoices are issued and when payment is due
• what happens if there’s a dispute about an invoice
• what expenses can be reimbursed (and what needs pre-approval)
• whether expenses require receipts, and the timeframe to claim them

If you’re using performance-based fees, you’ll also want careful drafting around how metrics are calculated, what data is relied on, and what happens if financial reports are corrected later.

6. Confidentiality And Use Of Business Information

Your manager will likely have access to valuable information: pricing strategies, supplier terms, customer lists, internal processes, marketing plans, and sometimes software code or product roadmaps.

A strong confidentiality clause should cover:

• what counts as confidential information (ideally broad, but clear)
• how the manager can use it (only to perform the services)
• who they can disclose it to (usually no one, unless approved)
• security obligations (password protection, secure storage, etc.)
• how long confidentiality lasts (often continuing after termination)

If confidentiality is central to the relationship (for example, you’re sharing sensitive commercial strategies), you may also use a standalone NDA. But for many arrangements, the management agreement can include robust confidentiality terms.

7. Intellectual Property (IP) Ownership

This clause is crucial for startups. If your manager creates or improves anything valuable while working with your business - such as marketing assets, operational playbooks, templates, product improvements, or content - you want clarity on who owns it.

Common approaches include:

• Business owns all IP created: the safest and most common for the business owner
• Manager retains pre-existing IP: but grants you a licence to use it
• Joint ownership: generally avoided unless you have a clear commercial reason and detailed rules

IP terms can get complicated quickly, especially if the manager uses their own systems or templates. The key is to avoid a situation where you’re paying for “management services” but don’t actually own or have ongoing rights to use the outputs.

8. Subcontracting And Delegation

If you’re engaging a management company, they may want to use their staff or subcontractors. Even if you’re engaging an individual, they may want to outsource parts of the work.

Your management agreement should say whether subcontracting is allowed, and if so:

• whether you must approve subcontractors first
• whether subcontractors must sign confidentiality obligations
• whether the manager remains responsible for the work quality

This protects you from “surprise delegation” where sensitive parts of your business end up in the hands of unknown third parties.

9. Compliance With Laws And Business Policies

Even though the manager is carrying out tasks, the business owner is often the one who ultimately wears the legal risk.

It’s common for a management agreement to require the manager to comply with:

• Australian Consumer Law (ACL) obligations (especially if they handle customer communications, refunds, or advertising)
• workplace and safety procedures (where the manager supervises staff)
• privacy obligations (if they access customer data)
• your internal policies (for example, expenses, social media approvals, purchasing limits)

If your business collects customer data online, it’s also a good idea to align the manager’s duties with your Privacy Policy, particularly if they are handling marketing lists, CRM data, or customer support workflows.

10. Reporting, KPIs And Performance Reviews

To manage a manager (without micro-managing), you need visibility.

Your agreement can include:

• reporting frequency and format (for example, weekly KPI updates)
• access to key systems or dashboards
• review meetings (monthly or quarterly)
• performance targets (and what happens if targets aren’t met)

KPIs are powerful, but only if they are measurable and within the manager’s control. If KPIs depend on factors you control (like budget approvals), be realistic and specific.

11. Liability, Indemnities And Insurance

Liability clauses manage who carries the risk if things go wrong.

Depending on the relationship, you may want to address:

• limits on the manager’s liability (sometimes capped to fees paid, or a set amount - whether a cap is appropriate and enforceable will depend on the context)
• indemnities (where one party covers the other for certain losses - these need to be drafted carefully)
• exclusions (like indirect or consequential losses)
• requirements for the manager to hold insurance (such as professional indemnity)

These clauses should be drafted carefully. What’s “reasonable” depends on your bargaining power, the risk profile of your business, and the role the manager is performing.

If you’re thinking about capping liability or excluding certain loss categories, it helps to understand how limitation of liability clauses typically work in Australian contracts.

12. Termination, Notice And Handover

Termination clauses are where many template agreements fall short. For business owners, the goal is to ensure you can exit the relationship efficiently and protect continuity.

Common termination terms include:

• Termination for convenience: either party can end the agreement with notice (for example, 14 or 30 days)
• Termination for cause: immediate termination for serious breach, misconduct, fraud, or failure to meet compliance requirements
• Cure periods: a short window to fix certain breaches before termination

Just as important is the handover process. Your agreement should cover what happens when the relationship ends, including:

• return of business property (laptops, keys, cards)
• return or deletion of confidential information
• handover of passwords and access credentials
• delivery of work-in-progress and documentation
• transition assistance for a set period (if needed)

This is especially important if the manager controlled your systems or client communications. Without a handover clause, you can end up locked out of your own operations.

13. Restraints (Non-Compete And Non-Solicitation)

Many business owners want to prevent a manager from leaving and immediately competing - or worse, taking staff, suppliers, or customers with them.

Restraints can include:

• non-compete: restricting the manager from running a competing business
• non-solicitation: restricting them from approaching your customers, suppliers, or staff
• non-interference: preventing disruption to your operations

In Australia, restraints need to be reasonable to be enforceable. Whether a restraint will be enforceable depends heavily on the specific facts (including the role, business interests being protected, duration and geographic scope), so it’s worth getting advice before relying on a clause from a template.

14. Dispute Resolution

Even with a strong agreement, disagreements can happen. A dispute resolution clause can help you avoid expensive, time-consuming litigation by setting a process first.

Common steps include:

• a requirement to notify the other party in writing
• a negotiation period between decision-makers
• mediation (often through an agreed mediator)
• court proceedings only if earlier steps fail

This clause is especially useful if you’re working closely with the manager and want to preserve the relationship where possible.

Management Agreement vs Employment Contract: Getting The Structure Right

A common question we see from small businesses is whether a management agreement “replaces” an employment contract.

In many cases, they serve different purposes:

• Employment contract: best where the manager is an employee working in your business, under your direction and control, with entitlements under the Fair Work system.
• Management agreement: often used where a third-party manager or management company provides services (more like a contractor relationship), or where the arrangement is more commercial in nature (for example, managing a venue, a business unit, or a joint venture’s operations).

If you’re engaging an employee, you’ll want to be careful about using a contractor-style management agreement in a way that doesn’t reflect reality. Worker classification can be complex, and misclassifying staff can create serious legal and financial risk.

If you’re unsure which structure fits, it can be worth getting advice early - especially before you lock in pay arrangements, KPIs, or termination rights.

Other Legal Documents That Often Sit Alongside A Management Agreement

A management agreement usually doesn’t sit alone. Depending on how your business operates, you may also need other core legal documents to properly protect the business and clarify related relationships.

• Service Agreement or customer-facing terms: if the manager is delivering services to your clients, you’ll want consistent customer terms to reduce disputes and clarify scope.
• Shareholders Agreement: if your manager is also a co-founder or equity holder, a Shareholders Agreement is often essential to set decision-making, exits, funding, and dispute rules.
• Company Constitution: if you operate through a company, a Company Constitution can set internal governance rules that your management arrangements should align with.
• General Security Agreement (GSA): if management fees involve lending or secured arrangements, a General Security Agreement may be relevant in some commercial structures.
• Workplace policies: if the manager supervises staff, policies on conduct, privacy, and workplace processes help ensure consistency (and can reduce employment disputes).

As your business grows, these documents often work together as a legal “system”. When the documents are aligned, you reduce gaps and contradictions that can be exploited in a dispute.

Key Takeaways

• A management agreement sets out how someone will manage your business (or part of it), including responsibilities, authority, fees, and performance expectations.
• A management agreement template can be a helpful starting point, but it usually needs tailoring to match how your relationship actually operates (and it isn’t a substitute for legal advice).
• Key clauses to include are scope of services, decision-making authority, fees and expenses, confidentiality, IP ownership, liability, termination and handover, and dispute resolution.
• Be careful about whether your arrangement is really an employment relationship - if it is, you may need an Employment Contract (or a different structure) to stay compliant.
• Management agreements often sit alongside other core business documents like a Shareholders Agreement, Company Constitution, and Privacy Policy, depending on your setup.

If you’d like help putting together a management agreement that fits your business (or reviewing a management agreement you’ve been asked to sign), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.