Your Restraint Clause Was Never A Management System

You performance manage an offshore employee the same way you manage anyone you cannot realistically sue: a written standard, a fixed review date, a documented conversation the moment the work misses that standard, and a decision at the end of it. That is the whole answer to how to performance manage an offshore employee. It is also about to become the only answer available for your Australian staff.

Most founders have never needed the method, because a restraint clause was quietly doing a manager's job. We sell the system that records this, so read what follows as disclosure. Our borderless HRIS exists because almost none of these conversations get written down anywhere.

Treasury spent four weeks consulting on removing your deterrent

Treasury's consultation on reform to non-compete clauses and other restraints opened on 7 September and closed on 2 October. The draft bill would ban non-compete clauses for low- and middle-income workers, ban co-worker non-solicitation clauses, and ban no-poach and wage-fixing agreements. Treasury's stated purpose is that the reform “allows workers to freely move to better-paying and more productive jobs”.

Assistant Minister Andrew Leigh, in an op-ed on his ministerial site, puts one in five Australian workers under a non-compete today. He cites e61 research finding that workers at firms heavily using non-competes earn 4 per cent less on average, and totals that across the workforce at $7 billion a year.

Read that number from the employer's side. It is what the clause has been earning you.

What performance managing an offshore employee is worth once the clause goes

What was the restraint actually returning?

Four per cent of the $67,000 median earnings in that calculation is $2,680 a year per restrained head. Apply the one-in-five share to a twenty-person business and four of your people are restrained, which is $10,720 a year of pay nobody is handing over.

What does the alternative cost?

Outstaffer's own AI Recruiter page puts the agency cost of filling a role at $10,000 to $30,000. Take the midpoint. One departure you failed to see coming costs $20,000, so the restraints across your entire team fund about half a replacement a year, and only in a year where nobody leaves.

That is not a retention strategy. It is a discount with a legal threat stapled to it.

The honest case for keeping the restraint

The Australian Industry Group made that case on 2 October, in its submission to the same consultation. It calls a blanket prohibition “unwarranted” and “arbitrary and disproportionate”, and says the result is the loss of “meaningful prospective protection for confidential and commercially sensitive information”. Confidentiality obligations, it argues, “generally provide remedies only after damage has occurred”.

The asymmetry is real and it is the strongest point in the debate. Ai Group then predicts employers will respond by reducing “investment in training and development” and by restricting “access to sensitive work”.

That is where I part company with it. If a clause is the only reason you are willing to train someone, the training was never an investment in the person.

Related reading

• Giving an offshore employee a pay rise or promotion
• What it takes to hold the quality of work delivered by offshore staff

How to performance manage an offshore employee when nothing is enforceable

Anyone employing offshore has lived in the post-restraint world for years. No Australian court is enforcing a non-compete against a person in Manila, and the employment contract sits with the employer of record rather than with you, which is why who holds the management line day to day was always the real question.

The method has not changed. Define the output rather than the hours. Set the review date when the engagement starts, not at the point you are already annoyed. Put the first difficult conversation in writing the day it happens, because ending an offshore employment properly rests on what you wrote down three months earlier. Restraints, notice periods and termination rules all differ by country, so get local advice before you rely on any of them.

If you are carrying someone whose scope was never written down, sign up and run one role through it properly. Learning to performance manage an offshore employee is the same skill, bought a year early.

So here is the question worth answering. If the restraint vanished from your templates tomorrow, which of your people would you suddenly have to start managing?