If you’re building a startup or small business, relationships are everything. Your customers, clients, suppliers, and team are often the “engine” that keeps revenue and growth moving.
That’s also why it can feel so risky when a key employee resigns, a contractor finishes up a project, or a business partnership ends. The worry is usually the same: will they take our customers or team with them?
This is where non-solicitation clauses come in. Used well, they can help you protect your customer relationships, your staff, and the goodwill you’ve worked hard to build - without going as far as a non-compete.
Below, we’ll walk you through what non-solicitation clauses are, when they’re useful, what makes them more likely to be enforceable in Australia, and how to draft them in a way that’s practical for real businesses (not just theory).
Note: This article provides general information only and does not constitute legal advice. Whether a clause is enforceable depends on your specific circumstances and (in some cases) the state or territory laws that apply.
What Is A Non-Solicitation Clause?
A non-solicitation clause is a contractual promise that one party won’t approach, entice, or try to win over certain people connected to the other party for a set period of time.
In a small business context, this usually means restrictions on soliciting:
- Customers/clients (e.g. “don’t try to move our customers to your new business”), and/or
- Employees and contractors (e.g. “don’t try to hire our staff away”).
You’ll commonly see non-solicitation clauses in:
- employment contracts
- contractor agreements
- sale of business agreements
- distribution/reseller arrangements
- partnership and shareholder arrangements
What Does “Solicit” Usually Mean?
“Solicit” usually involves some active step to persuade someone to move across - for example, calling a client, sending an offer, pitching a service, or approaching an employee about joining a competitor.
That’s different from a scenario where someone independently reaches out to a departing employee or contractor without being prompted (although contracts sometimes try to deal with this too - more on that below).
Why Businesses Use Non-Solicitation (And Why Startups Especially Should Care)
Startups often have:
- a small, tight customer base
- a lean team where each person holds key knowledge and relationships
- limited marketing budget to “replace” lost customers quickly
- fast-changing roles where contractors and employees can become the face of the business
In other words, if one person leaves and actively targets your customers or team, the damage can be disproportionate.
When Should Your Business Use Non-Solicitation Clauses?
Non-solicitation isn’t just for big corporates. In fact, it can be most valuable when your business is small enough that losing a handful of customers (or one key employee) makes a real dent.
Here are common situations where we see non-solicitation clauses help.
1) Hiring Employees Who Build Customer Relationships
If an employee is client-facing (sales, account management, consulting, customer success) or has a strong relationship with your customer base, a non-solicitation clause can help protect those relationships if they resign.
This is often built into an Employment Contract, alongside confidentiality obligations and clear rules about company property and systems.
2) Engaging Contractors Who Work Closely With Your Clients
Contractors can be just as connected to your clients as employees - especially in agencies, IT projects, marketing, consulting, and creative services.
Because contractors are independent, you should be extra careful to set expectations in writing (including non-solicitation and confidentiality), usually through a tailored Contractors Agreement.
3) Collaborating With Another Business (Joint Projects, Referrals, Partnerships)
If you’re partnering with another business (for example, a joint delivery model, a referral arrangement, or a co-built product), each side may be exposed to the other’s customer relationships.
A non-solicitation clause can help set a clear boundary: “We can collaborate, but we can’t poach each other’s customers or staff.”
4) Buying Or Selling A Business
In a business sale, a large part of what you’re buying is often the goodwill - the customer relationships and brand value.
Non-solicitation restrictions are commonly used to prevent the seller from immediately approaching the customers they just sold and offering the same services under a new brand.
5) When You Have Co-Founders Or Investors
Founder breakups and shareholder disputes can get complicated quickly, particularly where one founder leaves and starts something similar.
Non-solicitation obligations may appear in a Shareholders Agreement to help protect the company’s customers, staff, and opportunities if someone exits.
What Makes A Non-Solicitation Clause Enforceable In Australia?
This is the part many business owners get stuck on: you can put a clause in a contract, but will it actually hold up if there’s a dispute?
In Australia, non-solicitation clauses are a type of restraint of trade. Courts can enforce restraints, but generally only to the extent they’re:
- protecting a legitimate business interest, and
- reasonable in scope (duration, geography, and what conduct is restricted).
This is why drafting matters. A clause that’s too broad can be difficult to enforce (or may not be enforceable at all). In some cases, courts may be able to enforce a narrower part of a restraint, but that depends on how it is drafted and which state or territory law applies.
Where your business relies on restraints, it’s often worth getting tailored advice on restraint of trade terms so the clause fits the reality of your operations.
Legitimate Business Interests: What Are You Actually Protecting?
Courts don’t enforce restraints just because you want to reduce competition. The clause should be tied to something you genuinely need to protect, such as:
- customer connections (especially where the departing person had direct contact)
- confidential information (pricing, strategy, pipelines, margins, customer lists)
- workforce stability (protecting your team from coordinated poaching)
A good non-solicitation clause is specific about the interest it’s designed to protect - not just “you can’t deal with anyone we’ve ever worked with.”
Reasonableness: Time, Scope, And Practicality
What’s “reasonable” depends on your business and the person’s role. However, courts often look at:
- Duration: How long is the restriction? (Commonly 3-12 months, sometimes longer in sale-of-business contexts.)
- Who is covered: Is it limited to certain customers (e.g. those the person worked with) or all customers?
- What conduct is restricted: Only “soliciting” (active targeting), or also “accepting business” (passive)?
- Geography: This matters more for location-based businesses than online businesses, but it can still be relevant.
For many startups, geography isn’t the main issue - the “reasonableness” analysis often comes down to duration and which customers are included.
Cascading Clauses (The “Stepped” Approach)
You’ll sometimes see restraints drafted as a series of options, for example:
- 12 months, or if not enforceable then 6 months, or if not enforceable then 3 months
- all customers, or if not enforceable then customers the person dealt with, etc.
This approach can help in some situations by giving a court a narrower option to enforce if the broadest version is too much. However, the effectiveness of cascading clauses varies by jurisdiction and drafting, and they don’t guarantee a court will “read down” an overbroad restraint.
How To Draft A Practical Non-Solicitation Clause (Without Overreaching)
If you’re drafting (or reviewing) a non-solicitation clause, your goal is usually simple: protect what you’ve built, but keep the clause realistic so it’s more likely to be enforceable and less likely to spark disputes.
Here are the key building blocks we recommend thinking through.
1) Be Clear About Who You’re Protecting
Non-solicitation clauses often cover one or more of the following groups:
- Customers/clients
- Prospective customers (e.g. leads in the pipeline)
- Employees
- Contractors
- Suppliers (less common, but relevant in some industries)
From a practicality and enforceability perspective, narrower is often better. For example, restricting solicitation of “customers the person worked with in the last 6-12 months” is usually easier to justify than “all customers since the beginning of time.”
2) Define “Customer” And “Prospective Customer” Carefully
Startups frequently have messy CRMs, informal pipelines, and relationships sitting in founders’ inboxes. That’s normal - but it can make disputes harder if your clause is vague.
Consider definitions like:
- Customer: someone who paid for goods/services in the last X months
- Prospective customer: someone you made a proposal to, negotiated with, or had substantive discussions with in the last X months
This helps avoid arguments about whether someone was truly “your customer” or merely a random contact.
3) Decide Whether You’re Restricting “Soliciting” Only, Or Also “Accepting” Work
There’s a big difference between:
- non-solicit: “you can’t approach or target our customers”, and
- non-deal / non-accept: “you can’t do work for our customers even if they come to you.”
Many businesses prefer non-solicitation because it’s less restrictive (and can be easier to justify). But depending on the role and the risk, you may consider adding limited “non-dealing” language for specific high-risk customers.
The key is to align the restriction with what you genuinely need to protect - and what’s fair in the circumstances.
4) Set A Time Period That Matches Your Sales Cycle
A useful way to think about duration is: how long would it take us to stabilise the relationship or replace the departing person?
For example:
- If your sales cycle is short and customers switch providers quickly, a shorter period may make sense.
- If your work involves long-term retainers or enterprise relationships, a longer period may be easier to justify.
For startups, a common drafting mistake is copying a “one size fits all” time period from another template without considering how the business actually operates.
5) Think About Employee Non-Solicitation (No Poaching Your Team)
Employee non-solicitation clauses usually stop a departing person from:
- encouraging your employees/contractors to leave, or
- offering them roles in a competing business
If your team is small, this can be just as important as customer protection. A coordinated “team move” can be extremely disruptive.
6) Make Sure The Clause Matches The Contract Around It
Non-solicitation clauses rarely stand alone. They often work best alongside:
- Confidentiality (so customer lists, pricing and strategy aren’t used to target customers)
- IP clauses (so your systems, templates and content aren’t copied)
- Return of property (so devices, documents and logins are handed back)
- Termination and handover obligations (so the transition is managed properly)
If you update one part of the agreement (like adding a non-solicit clause later), make sure the rest of the contract is consistent. If you need to change signed terms, it’s worth following a proper variation process so you don’t end up with a clause that’s unclear or disputed - the approach in Making Amendments To Contracts is a good baseline.
7) Plan For Real-World Scenarios (Like LinkedIn And Announcements)
In practice, many disputes don’t start with an obvious sales pitch. They start with:
- a LinkedIn “I’ve started a new role” post
- a newsletter announcement
- messages to former colleagues
A practical clause may clarify what counts as solicitation versus a general announcement.
For example, you might treat a generic post as okay, but direct messages to customers with an offer as not okay. This kind of clarity can reduce conflict and make expectations easier to follow.
Non-Solicitation vs Non-Compete vs Confidentiality: What Should You Use?
Businesses often ask: “Do we need non-solicitation, or a non-compete, or both?”
The answer depends on your risk profile, but here’s a practical way to view it.
Non-Solicitation
Purpose: stop active targeting of your customers, clients, or staff.
Best for: businesses that want to protect relationships but still allow people to work elsewhere.
Why it’s popular: it’s often seen as more “reasonable” than trying to stop someone working for a competitor entirely.
Non-Compete
Purpose: stop someone working in a competing business for a period.
Best for: higher-risk roles where there’s a genuine risk of immediate competitive harm that can’t be addressed by confidentiality and non-solicit alone.
Watch-outs: non-competes can be harder to enforce if they’re too broad, particularly for junior roles.
Confidentiality / NDAs
Purpose: protect sensitive information, regardless of where the person goes next.
Confidentiality clauses are often the “non-negotiable” baseline for businesses, and they’re commonly reinforced through an Non-Disclosure Agreement in commercial negotiations or collaborations.
Practical tip: confidentiality alone doesn’t always stop solicitation if someone has strong personal relationships with customers. That’s why businesses often combine confidentiality with non-solicitation.
So Which One Is Right For You?
For many startups and small businesses, a combination of:
- confidentiality, and
- targeted non-solicitation (customers + staff)
is a strong starting point - particularly where you want something enforceable and proportionate.
If you think you need more restrictive protections, it’s worth getting advice early so you can tailor the restraint properly and avoid drafting something that looks strong on paper but is difficult to rely on in a dispute.
Key Takeaways
- Non-solicitation clauses can help protect your customers, clients and team when an employee, contractor, or business partner leaves.
- In Australia, non-solicitation clauses are a type of restraint of trade, so enforceability often comes down to whether the clause protects a legitimate business interest and is reasonable in scope.
- A practical clause is usually specific about who it covers (e.g. customers the person worked with) and time-limited to what your business genuinely needs.
- Non-solicitation often works best alongside strong confidentiality, clear handover obligations, and well-drafted core contracts (employment, contractor, and shareholder documents).
- If you’re updating a contract, make sure the change is documented properly so the restraint terms don’t become unclear or disputed later.
If you’d like help putting a non-solicitation clause in place (or reviewing whether your current clause is likely to be enforceable), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
