Understanding Non-Solicitation Clauses: Protecting Your Business Relationships in Commercial Agreements

Running a successful business in Australia is about more than innovation and hard work – it’s also about building and protecting important relationships. As you grow, your connections with clients, staff, suppliers, and partners become some of your most valuable assets. But what happens if a key team member leaves and tries to take those relationships with them?

This is where solicitation comes in. If you’re entering into a commercial agreement (for example, with employees, contractors, or business partners), you’ll likely come across what’s known as a non-solicitation clause. But what does this term mean, why is it essential, and how do you make sure you’re protected – without overstepping what’s fair or legal?

Whether you’re hiring your first staff member or negotiating a major supply agreement, understanding solicitation and non-solicitation clauses could save your business from avoidable risks down the line. In this practical guide, we’ll break down everything you need to know about these clauses, what to include, how they’re enforced in Australia, and how to draft them in a way that works for you and your business partners.

Keep reading to learn how to safeguard your valuable business relationships the right way – and how Sprintlaw can help you get it right the first time.

What Is Solicitation, and How Can It Affect Your Business?

Before diving into contracts, it’s important to understand what solicitation means in the business world. Solicitation refers to the act of actively seeking or enticing someone to change their business relationship – for example, trying to convince your clients, suppliers, or staff to leave your business and work with (or for) someone else instead.

This often becomes a risk when an employee, contractor, or business partner leaves your company and uses their access to confidential information or contacts to entice away your clients or top talent. Such behavior can significantly damage your business, especially if you’ve invested years in building those relationships.

Some common examples of solicitation include:

• A former staff member contacting your key clients to offer them the same services, but through their new business.
• An ex-contractor offering jobs or contracts to your employees, attempting to recruit them away.
• A departing business partner contacting your suppliers to redirect business to a competitor.

It’s easy to see why many business owners are concerned about solicitation – so how can you protect yourself legally?

What Is a Non-Solicitation Clause?

A non-solicitation clause is a section written into a commercial contract that prevents one party from enticing clients, customers, suppliers, or employees away from the business after the agreement ends.

You’ll most commonly see non-solicitation clauses in:

• Employment agreements
• Contractor agreements
• Shareholders or partnership agreements
• Supplier or major commercial contracts

The goal? To help maintain the value of your business relationships and prevent damage caused by unfair or aggressive poaching.

A typical non-solicitation clause in Australia may look like this:

For a period of 12 months after the end of this agreement, Party A must not directly or indirectly approach, solicit, or entice away any client, customer, or employee of Party B which Party A had dealings with during the term of this agreement.

These clauses can be tailored to restrict solicitation in different ways: by time period, by location, and by type of relationship (e.g., only clients, or also staff and suppliers).

Why Do You Need a Non-Solicitation Clause in Your Contracts?

You might be wondering – is a non-solicitation clause really necessary? Here are some reasons why including one can be crucial for your business:

• Protects Your Client Base: Stops departing employees or partners from taking your clients and damaging your revenues.
• Secures Your Workforce: Prevents ex-staff or contractors from recruiting your top talent for competing ventures.
• Maintains Trust With Suppliers: Reduces the risk that someone will entice your essential suppliers to switch to a competitor.
• Protects Goodwill and Value: When selling your business or bringing on investors, a strong non-solicitation clause helps maintain your company’s value.

A well-drafted non-solicitation clause can also make business disputes less likely. When both parties know the boundaries up-front, there’s less room for misunderstanding down the line.

How Are Non-Solicitation Clauses Enforced in Australia?

Under Australian law, not every restriction in a contract will be enforced by the courts. When it comes to non-solicitation clauses, judges focus on whether the clause is reasonable – meaning it’s no more restrictive than necessary to protect your legitimate business interests.

Here’s what courts will generally consider:

• Length of Restriction: The timeframe should be as short as is reasonably needed (e.g., 6-12 months is common; multi-year bans might be struck out).
• Geographical Scope: Is the restriction limited to the local area where you operate, or is it Australia-wide? Overly broad geographic bans are often unenforceable.
• People Covered: Does the clause only relate to your actual clients, or anyone you’ve ever dealt with? The more targeted the restriction (e.g., only the employee’s own clients or direct team), the more likely it will be upheld.
• Type of Solicitation: Restricting someone from poaching is enforceable; however, bans on “working for a competitor” (non-compete clauses) are much harder to enforce and must be drafted carefully.

If you want your clause to be enforceable, it’s important to balance what your business genuinely needs with what’s fair to the other party. For more detail on what makes a contract legally binding and enforceable, check out our comprehensive guide.

What Should You Include in a Non-Solicitation Clause?

Every business is unique, so working with a legal expert ensures your clause is tailored and effective. However, most strong non-solicitation clauses address the following points:

• Who Can't Be Solicited: Specify whether the restriction applies to clients, customers, employees, or suppliers. Sometimes it’s a subset, like “only clients the employee had direct contact with in the past 12 months.”
• What Counts as Solicitation: Define “solicitation” clearly. Does it include direct approach (e.g., calling a former client), indirect enticement (encouraging someone else to do so), or advertising?
• How Long the Ban Lasts: Set the minimum period necessary to protect your business, such as 6 months, 12 months, or another appropriate timeframe.
• Where the Restriction Applies: Does the clause only apply within a certain city, state, or Australia-wide? The location should be reasonable for your type of business.
• Carve-Outs/Exceptions: If there are any relationships or scenarios the parties agree should not be covered (such as long-standing family friends who were your clients before), spell these out.

Including these points ensures your non-solicitation clause isn’t just boilerplate, but is a practical tool for protecting your unique business needs.

Are Non-Solicitation Clauses the Same as Non-Compete Clauses?

Although these clauses are often mentioned together, they’re quite different. A non-compete clause attempts to stop someone from working for a competitor or setting up a competing business at all, usually for a set period and location.

On the other hand, a non-solicitation clause is more targeted. It’s focused on stopping poaching of your clients, staff, or suppliers – not all competitive activity. Australian courts are much more likely to uphold reasonable non-solicitation clauses, while non-compete clauses (being broader) face tougher scrutiny.

If you’re considering both types of restraints, or want to understand the difference between them and other agreement types (like NDAs), our article on deeds versus agreements is a helpful place to start.

Where Should You Use Non-Solicitation Clauses?

Non-solicitation clauses can and should appear in several types of commercial relationships, including:

• Employee Agreements: To prevent departing staff from taking clients, customers, or recruits.
• Contractor or Consultant Agreements: Especially if you give access to your databases, clients, or confidential information.
• Supplier or Distribution Agreements: To stop suppliers or distributors from poaching your customers.
• Shareholder or Partnership Agreements: When you want to ensure that exiting partners don’t use their insider knowledge to disrupt your business.

If you’re unsure exactly which agreements in your business need a non-solicitation clause, talking to a legal expert is a smart first step. As every business operation is different, getting this right from day one can save legal headaches and costly disputes.

What Legal Documents Should You Prepare?

To give your business the best protection possible against solicitation risks, make sure you have the appropriate legal agreements in place. As a guide, here are some of the main documents to consider:

• Employment Agreement: Sets out employee obligations, including non-solicitation and confidentiality terms.
• Contractor Agreement: Defines rules for independent contractors, including protecting client lists and sensitive data.
• Shareholders Agreement: Sets expectations among business owners or investors and includes non-solicitation among partners (see our Shareholders Agreement service).
• Supplier or Distribution Agreement: Contains terms that help prevent poaching of customers or confidential contacts.
• Non-Disclosure Agreement (NDA): While not the same as non-solicitation, NDAs protect confidential information to further reduce your business risk (more on NDAs here).

It’s also smart to regularly review your legal documents as your business grows and your relationships evolve – a clause that made sense as a startup might not provide enough protection as you scale.

What If a Non-Solicitation Clause Is Breached?

If you suspect a former employee, contractor, or business partner is trying to solicit your clients or team in breach of a contract, here’s what you should consider:

• Gather Evidence: Document any contact or communication you believe breaches the clause (emails, calls, LinkedIn messages, etc.).
• Review the Exact Clause: Check the wording and scope within your agreement. The clause must be clear and reasonable to be enforceable.
• Send a Formal Letter: Often, your lawyer may send a cease-and-desist letter as a formal warning and demand to stop solicitation activity.
• Consider Legal Action: If the behavior doesn’t stop, you may be able to seek an injunction (court order) to prevent further breaches and may pursue damages in some cases.
• Talk To a Legal Expert: Enforcing restraints can be complex. Getting specialist advice early can improve your chances of protecting your business interests.

If you’re not sure how to proceed, Sprintlaw’s legal experts are here to help you understand your options and take action if necessary.

How Can You Ensure Your Non-Solicitation Clause Is Fair – and Enforceable?

To give your business the maximum chance of protection (and avoid wasting time on an unenforceable contract), follow these best practices:

• Be Clear and Specific: The more precise you are about what solicitation means and who’s covered, the stronger your clause.
• Keep It Reasonable: Don’t make the restriction any broader in time, area, or scope than truly necessary.
• Tailor for Each Relationship: A senior executive’s agreement may require different clauses than a junior employee’s.
• Update Regularly: As your business grows and changes, review and update your agreements to reflect your current needs.

If you need help drafting, reviewing, or updating your commercial agreements, Sprintlaw can work with you to ensure your business is protected, compliant, and future-proof from day one. You can also read our guide on amending contracts for more tips on keeping your contracts up-to-date.

Do I Need Other Protections Beyond Non-Solicitation Clauses?

Absolutely. While non-solicitation clauses are powerful, they work best as part of a broader legal strategy to protect your business relationships and secrets. Consider:

• Confidentiality (NDA) clauses: Keep sensitive information private.
• Intellectual property protection: Registering your trade marks to stop competitors from copying your brand (more on trademark classes here).
• Clear termination provisions: Make sure everyone knows what happens when an agreement ends.
• Well-drafted employment and contractor agreements: Cover all rights, responsibilities, and restraints fairly and with full compliance to employment law.

Getting these pieces in place from day one is the best way to set your business up for long-term success.

Key Takeaways

• Solicitation happens when someone tries to entice your clients, staff, or suppliers away from your business – potentially causing serious harm.
• Non-solicitation clauses restrict this activity and should be carefully drafted in your commercial contracts to protect your business relationships.
• For a clause to be enforceable in Australia, it must be reasonable in scope, duration, and geography, and be tailored to your needs.
• These clauses aren’t the same as non-compete clauses – they’re more likely to be upheld and focus on protecting your key business assets from being poached.
• To ensure your contracts are strong and cover all bases, speak with a legal expert and update your agreements as your business grows.

If you would like a consultation on crafting or reviewing non-solicitation clauses for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.