Quitting a job: Notice periods, references and restraint of trade

Quitting a job and handing in your resignation is usually a major life event, but recently more of us seem eager to switch employers or even careers, in what’s being called the “Great Resignation”. If you’re considering joining that exodus, you’re not alone; nearly four in ten Australians said they were looking for a new job, according to a recent survey by PwC Australia.

But leaving a workplace is not always as straightforward. The resignation process, contractual obligations, Restraint of Trade clauses and notice periods can all cause a headache if not factored in and planned for.

I'm not sure what's in my contract or enterprise agreement

Do you know what’s actually in your employment contract or applicable enterprise agreement? It’s easy to forget important details – especially if you signed it years ago.

Buried in there could be a clause or two which now might cause problems if you plan on quitting your job, so look out for:

• What’s your notice period?
• Is there a Restraint of Trade clause, which precludes you from working in a certain industry or field for a period of time?
• Would leaving a job before a certain time affect bonus entitlement.

It's best to check these clauses before you start the resignation process, at the beginning of your job hunt.

Do I have to work my notice period? 

It’s complicated. Most contracts have about a one-month notice period. Some industries, or at senior or executive levels, notice periods can be three months or more.

Technically, leaving a job before the end of your notice period would be breach of contract, but few employers tend to enforce those obligations.

COVID appears to have changed the power dynamic at work, shifting it in favour of employees.

Employers may have found recruiting a replacement difficult during lockdowns and restrictions, so could want to retain staff. They might be more likely to enforce obligations – especially for a key member of the team, who has important relationships with stakeholders or clients.

Ideally, you want to leave on good terms with an employer. Even if you don’t get sued, there’s a chance you’ll be viewed as a bad leaver which could cause problems if you’re seeking a positive reference.

I’m joining a rival firm, can my former employer stop me?

This issue depends on your individual circumstances and your contract of employment. Generally, a post-employment restraint is unenforceable, unless an employer can establish that it's reasonable, judged at the time that it was agreed.

If you’re leaving to join a rival employer and look like you may bring a significant number of clients with you, a Restraint of Trade clause in your contract could be an issue.

Your former employer may have good grounds to argue they have legitimate interest in limiting your ability to work in that area for period of time, subject to your contract.

If you have a more administrative role, not client facing or bringing in business, then these clauses are likely to be unenforceable. An employer cannot simply stop you working elsewhere.

If there’s a restraint of trade clause, it is important to seek advice before making any decisions. Is the clause likely to be enforceable? If it is, you should obtain advice about what steps you can take to limit your chances of your former employer litigating.

How do I secure a good reference when leaving a job?

Employers are not obliged to give positive written references. They might provide something called a statement of service, setting out when you worked and what position you held.

However, if you’re keen for a positive feedback from an employer if they are contacted as part of employment screening, it’s wise to leave on good terms.

If that’s not possible, it is best to be honest with your prospective employer if asked about why you left your former role.

Navigating an exit from a job can be delicate. But it always pays to know what your obligations and rights are. If in doubt, get advice from an experienced employment lawyer to make ensure that you do not make a costly error.