You built the team over years. You interviewed each developer, trained them, put them on the client's projects until they knew the codebase better than anyone else. Then the resignations start. One developer gives notice, then another. A week later your biggest client cancels the long-running engagement, and you find out why: they are hiring your people to run a new in-house team. It is the scenario every services business fears, and it is common in software development, where the client has watched exactly who does the work and how good they are.
What is actually at stake
Nothing in Australian law stops an employee from resigning and taking a better job, and nothing stops your client from hiring them. A restraint on trade is treated as void unless it is reasonable, because the law will not lightly stop a person from earning a living. Your rights therefore come from your contracts, and from how a court reads them.
That is the uncomfortable reality: if your client agreement and your employment contracts do not contain the right clauses, you have very few levers. What you stand to lose is not just one developer. It is the client's revenue, the confidential knowledge of your pricing and your methodologies that walks out the door, the months of recruitment and training it will take to rebuild the team, and the signal it sends to the developers who stayed. Acting fast matters, because the protections you do have are time-limited and the courts take a dim view of delay.
Working through it step by step
The steps below run in roughly the order you should take them. The first two are parallel: do both in the first day or two, before anyone changes their story.
Read both contracts before you make a phone call
Your rights come from two documents, and you need to know what each one says before you contact anyone.
- The client agreement: Look for a non-solicitation of employees clause. A well-drafted one says the client will not employ or approach your employees or ex-employees during the term and for a set period, commonly six months, after it ends. Also look for confidentiality clauses and for what the agreement says about ownership of the software.
- The employment contracts: Look for a post-employment restraint of trade clause, and check how wide it is: which activities it covers, which clients, how long it runs, and whether it has a geographic limit.
- Confidentiality clauses in both: Check what the departing developers are allowed to take and use, and which information about your business, your pricing and your other clients is protected.
If the client agreement has no non-solicitation clause, your options narrow sharply. You may still have the employees' restraints and the law of confidential information, but your strongest weapon, the promise the client itself signed, is missing.
Document the timeline and preserve the evidence
Before you accuse anyone of anything, put the facts on paper.
- Note the date of each resignation, the date of the client's notice, and every conversation, meeting and email in between.
- Save the emails and messages between the departing developers and the client before anything gets deleted. Preserve copies of the client agreement and the employment contracts as signed.
- Write down what each departing developer actually knew: access to source code, pricing, client contacts, project documentation.
- Check whether the developers who left all signed the same restraint clause, and whether any of them had unusual access to the client or reported into it directly.
Keep communications professional throughout. An angry phone call or an email accusing the client of theft will not help you in court, and it can damage the relationships with the staff who remain.
Put the client and the departing developers on notice
Once you know what the contracts say, have a lawyer send a letter of demand to the client, and a separate letter to each departing developer. The letters should identify the clause you rely on, explain the breach, and ask for written undertakings: the client will not employ the developer until the restraint period ends, and the developer will not start work there in the meantime. Give a short deadline, usually 48 to 72 hours, before you take the matter to court.
The letter is not just a demand. It becomes evidence that the other side knew about the clause and went ahead anyway. That is exactly how the successful case below unfolded.
Move for an injunction if they keep going
If the other side ignores the letter, your next step is an urgent application to court for an interlocutory injunction: an interim order that stops the client employing the developer, or the developer starting work, until the case is finally decided.
The test the court applies is whether there is a serious question to be tried and where the balance of convenience lies: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57. You will usually have to give an undertaking to pay damages to the other side if the injunction turns out to have been wrongly granted.
Two cases show how this plays out in practice.
In Quantum Service and Logistics Pty Ltd v Schenker Australia Pty Ltd [2019] NSWSC 2, a service provider's manager resigned to join its client, which traded as DB Schenker. The manager's own employment gave the provider no obvious lever, but the services agreement contained a clause 13.13 under which neither party would employ or approach for employment the other party's employees or ex-employees during the term and for six months after it ended. Quantum's lawyers sent a letter of demand on 30 November 2018. Schenker did not reply, and Quantum started proceedings on 4 December, the day before the manager's last day of work. The Supreme Court of New South Wales granted an interlocutory injunction restraining Schenker from employing the manager until the final hearing, on condition that Quantum genuinely implemented its offer to re-employ him and gave the usual undertaking as to damages. The point: the client was stopped, even though the departing employee himself was never sued.
In AECI Australia Pty Ltd v Convey [2020] QSC 207, the result was the opposite. A senior executive resigned to join Incitec Pivot, and his employer put him on paid gardening leave for the three-month notice period, then waited until four days before the leave ended to start proceedings. The Supreme Court of Queensland refused the injunction. The non-solicitation restraint was drawn far wider than the executive's actual role, covering knowledge he could not realistically have had, and the court criticised the employer's delay: two months of gardening leave had passed without any step to enforce the restraints. Overbroad clauses and slow action together cost the employer the relief.
Most of these matters settle before a final hearing. The injunction holds the position steady while the parties negotiate, which is usually what happens. But an injunction only works if you act quickly, while the restraint period is still running and the damage is still preventable.
Rebuild your protection for next time
Whatever happens with the current poaching, the next client and the next hire will be governed by the contracts you have in place now. Fix them while the lesson is fresh.
- Add a non-solicitation of employees clause to the client agreement: Model it on the clause that worked in Quantum: neither party will employ or approach the other party's employees or ex-employees during the term and for a period, commonly six months, after it ends.
- Tailor the employment restraints: A restraint is only enforceable to the extent it protects a legitimate interest: confidential information, client connections, or the stability of your workforce. Draft for a duration, geography and set of activities that match what the person actually does, not the whole company.
- Consider a payment-conditioned transfer of ownership: Software agreements can provide that ownership of the code and deliverables transfers to the client only once all invoices are paid in full, which gives the client a commercial reason to stay current.
- Remember the jurisdiction: In New South Wales, s 4 of the Restraints of Trade Act 1976 (NSW) allows a court to enforce a restraint to the extent it is not against public policy, even where the clause is not drafted in severable parts. Courts in other states generally work with the clause as written, so an overbroad restraint is more likely to fail in full. Do not rely on a court rescuing a badly drafted clause.
There are also practical, non-legal measures. Do not let a single developer be the only point of contact with a big client. Use team-based contact points on support tickets, spread client relationships across several people, and cross-train so no one developer is indispensable. Pay attention to the early warning signs: a client asking pointed questions about your developers' contracts, or a developer suddenly updating their LinkedIn profile.
Bringing this to a lawyer: what happens next
If any part of this situation is familiar, the value of a lawyer is mostly in the first 48 hours. A lawyer will read the client agreement and the employment contracts and tell you which clauses are enforceable and against whom. They will assess the strength of the evidence, the urgency, and the realistic prospects of an injunction, and they will be candid about the risk of the undertaking as to damages if the injunction is later found to have been wrongly granted.
If you decide to proceed, the lawyer will draft the letter of demand seeking undertakings, and if the other side does not comply, prepare an urgent application to the Supreme Court, often within days. They will also negotiate the settlement that most of these matters reach, and advise on how to restructure the client agreement and the employment contracts so the same thing cannot happen next year.
The contract that matters most is the one your client signed
Most founders assume their protection lies in the employment contracts, in the restraint of trade clauses their developers signed. The harder truth is that an employee's restraint must survive the public policy test: it is only enforceable if it is reasonable, and courts have shown they will strike down clauses drawn too wide, as in AECI. The promise your client signed not to poach your staff is different. It binds a commercial party that knew what it was agreeing to, and the Supreme Court enforced exactly that kind of clause in Quantum. If you have a client agreement with a non-solicitation clause, that is your best weapon, and it is only as strong as the speed with which you use it. A letter of demand followed by proceedings within days, as Quantum did, is what turns a clause into protection. Delay, as AECI shows, is what turns it into history.
The key points in this article: employees can always resign, so your protection comes from contracts. The client agreement's non-solicitation of employees clause is your strongest and most enforceable lever. Employment restraints must be reasonable in duration, scope and geography, and overbroad clauses fail. Interlocutory injunctions are available, but they are urgent remedies and the courts penalise delay. Fix the contracts now, and use practical measures to limit client exposure to named individuals.