Getting IP ownership with Australian employees right when an employer of record employs them

The starting point for copyright is the Copyright Act 1968, which contains a rule for works made by employees under a contract of employment; section 35(6) is the provision to read, and the current text should be checked on legislation.gov.au before anyone relies on it. That rule is framed around the employer, meaning the party to the contract of employment.

Other forms of IP work differently. Inventions, designs and trade marks are not governed by the copyright rule, and the safest planning assumption is that no statutory default will move an invention to your company without a written term. Software, product designs and data models often combine several kinds of rights at once. A single product release can include copyright in code, a potentially patentable method and confidential know-how, and each needs to end up with the same owner.

For those reasons, Australian employment contracts in knowledge roles normally include an express IP clause, even where a default rule might appear to help. The clause removes the argument about whether a particular piece of work was made “in the course of employment”, which is the kind of question that turns into a dispute when an employee leaves to start a competing business.

Take advice from an Australian IP lawyer on the specific clause. The points below explain what the clause has to achieve when an employer of record, not your company, signs the contract as employer.

An EOR arrangement needs a written chain because the employee’s contract is with the employer of record, so any rights that pass automatically, or by the employment contract, pass to the EOR first. Your company then needs a second transfer, from the employer of record to you, in the service agreement.

The chain has two links, and both must be in writing:

• Employee to employer of record: the employment contract assigns to the employer all IP created in the course of the work, including future rights, and records any consents the employee gives about how the work is used.
• Employer of record to client: the service agreement assigns those rights onward to you as they arise and obliges the employer of record to sign any further document needed to perfect the transfer.

Ask to see both clauses before the first hire starts, and check that they use the same definition of IP. A gap between the two, for example an employment clause that covers inventions and a service clause that covers only copyright, leaves some rights sitting with the employer of record.

Through Employer of Record Australia, the employment contract is between your hire and us as employer of record, and you can review the IP terms in that contract, and in our service agreement, before your hire signs, to confirm the rights carry through to your company. Our guide to the employer of record model sets out the other parts of the arrangement.

The employment contract clause should assign all IP created in connection with the role, oblige the employee to disclose inventions, and deal with the employee’s personal rights in their work. It should also be broad enough to cover work done outside office hours on the company’s projects, which is common in remote teams.

A practical clause list for a technical or creative hire:

• Assignment of present and future IP made in the course of the role or using the employer’s resources.
• A duty to disclose inventions and to help register them.
• Consent, to the extent the law permits, to uses of the work that might otherwise engage the author’s moral rights.
• A schedule of pre-existing IP the employee brings, which stays theirs, with a licence where it is used in the work.
• Rules for open-source contributions and personal side projects.

The pre-existing IP schedule prevents two common arguments. It stops a new hire later claiming that a component was theirs all along, and it stops the business accidentally claiming a personal project that had nothing to do with the job.

If your team also uses independent contractors in Australia, do not assume that any employee rule applies to them. Get a written assignment from each contractor as well, and read the employment contract checklist for the rest of the terms that belong in an employee’s contract.

Protect confidential information with a clear contractual duty, backed by access controls and an exit routine, because a clause alone does little once data has left your systems. The clause should define what is confidential, bind the employee during and after the job and require the return or deletion of material at the end.

For remote Australian staff, the controls matter as much as the words. Grant access by role, keep source code and customer data in company-managed tools, and avoid sharing sensitive files through personal accounts or messaging apps. Record which devices hold company data so that the exit process has a list to work from.

Plan the exit before the first hire starts. Agree with the employer of record who collects equipment, who removes system access and who confirms in writing that company material has been returned or deleted. Where the employee is placed on garden leave during the notice period, access should be restricted from the first day of that period.

Customer and personal data deserve their own line in the clause. An Australian employee working on your product may see records about customers in several countries, and your privacy obligations to those customers do not change because the employee is engaged through an employer of record. Brief the employee on the data rules that apply to your business during onboarding, and keep a record that the briefing took place.

Confidentiality obligations do not depend on the employee’s income, and they are not affected by the proposed non-compete ban described below. That makes them the most dependable protection for a business hiring in Australia while the restraint rules are under review.

Restraint clauses can be included in Australian contracts today, but whether a court would enforce one depends on the facts and on how the clause is drafted, so take advice from an Australian employment lawyer before relying on one. A restraint that simply copies a clause from another country’s template is a poor starting point.

The clauses in common use fall into four groups: non-competes, client non-solicitation, employee non-solicitation and no-dealing clauses. They restrict different behaviour and carry different risks, and the draft bill described below treats some of them differently.

For a first Australian hire, three habits help. Tie any restraint to a real business interest such as client relationships the employee will manage. Keep the duration and area no wider than that interest needs. Review the clause when the employee’s role changes, because a restraint drafted for a junior engineer rarely fits a regional sales lead.

Use notice periods as part of the plan. The NES sets minimum notice by length of service, and a contract can provide longer notice for senior staff, with the option of garden leave during it. That keeps an employee away from clients for a period without depending on a post-employment restraint.

The proposal would ban non-competes for anyone paid under the high income threshold, yet it exists only as an exposure draft and has no legal force. Treasury put the exposure draft, titled the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026, out for comment on 7 September 2026, with submissions due by 2 October 2026.

In its released form the draft targets workers paid less than the high income threshold (AUD 190,100 since 1 July 2026, per the Fair Work Ombudsman library). For the same group it would outlaw clauses stopping them from soliciting former colleagues and the layered restraints the draft calls cascading clauses. Separately, businesses would be barred from agreeing with each other not to poach staff or to fix wages.

No start date has been enacted. The bill still has to be finalised after consultation, introduced to Parliament and passed, and its text may change along the way. Contracts signed today are governed by the law as it stands, and nothing on this page should be read as saying the ban is in force.

The planning response is modest. For roles paid below AUD 190,100, avoid building protection around a non-compete that may not survive the reform, and lean on IP assignment, confidentiality, client non-solicitation and notice. For roles above the threshold, the draft’s non-compete limit would not apply, though ordinary enforceability questions remain. If you already employ Australian staff under contracts with non-compete clauses, there is nothing to rewrite today because of the draft. Note which contracts would be affected if the bill passes as released, and revisit them once the final text and any transition period are known.

The guide to the AUD 190,100 threshold covers the other rights that turn on the same figure.

Before the first Australian hire starts, the IP chain, the confidentiality terms and the exit routine should all be agreed in writing. Fixing them after the employee has begun producing work is harder, because an assignment signed later may not cleanly cover what was made before it.

• Employment contract with an IP assignment, disclosure duty and pre-existing IP schedule.
• Service agreement assigning the employer of record’s rights onward to your company, with matching definitions.
• Confidentiality clause plus access controls and a list of devices holding company data.
• Any restraint reviewed by an Australian lawyer, with the non-compete draft kept in view.
• A written exit routine covering equipment, access and confirmation of deletion.

Keep signed copies of every document in the chain where your legal team can find them. Investors and acquirers often ask to see the IP assignments for key staff during due diligence, and a clean set of paper for Australian hires avoids delay at that stage.

The EOR services page shows which of these steps we handle and which stay with your team.