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Exclusive Jurisdiction in Employment Contracts

Contractual employment disputes which may give rise to future legal proceedings are governed by an ‘exclusive jurisdiction’ clause in an employee’s contract.

A recent NSW Court of Appeal decision has emphasised the importance of careful drafting by an employer of any variations made to an employee’s contract, including proper consideration of the ‘applicable jurisdiction’ to properly enforce contractual obligations.

Factual History

Nick Rohrlach was a Qantas employee based in Singapore. Before his resignation in 2020, he worked for Qantas temporarily in Japan from 2017.

Following the notice of resignation, Rohrlach commenced legal proceedings in Singapore seeking declarations that his post-employment restraints were unenforceable and void.

In March 2021 Qantas commenced legal proceedings in NSW to:

  1. restrain Rohrlach from starting his new role with Virgin Australia by enforcing the contractual restraint clause
  2. Seek an injunction to prevent Rohrlach from continuing his proceedings in Singapore and;
  3. Seek an injunction to prevent Rohrlach from taking steps to restrain the continuation of the NSW proceedings.

There were a series of agreements which governed Rohrlach’s employment:

  1. An employment agreement (dated 17 December 2015) (‘Agreement’). This agreement contained a post-employment restraint clause and an exclusive jurisdiction clause restricting the jurisdiction to Singapore.
  2. An assignment letter (dated 8 November 2017) (‘Letter’). This letter was signed for the purposes of Rohrlach’s re-assignment to Japan. The letter did not amend the contract’s exclusive jurisdiction clause and explicitly stated that the letter was to be read alongside the employment agreement.
  3. A deed of release, an annexure to the assignment letter (‘Deed’). This deed contained a post-employment restraint. The deed specified it was governed by the laws of Japan but did not contain an exclusive jurisdiction clause.

Qantas sought to rely only on the restraints contained within the deed.

The NSW Supreme Court dismissed Qantas’ claims, finding in favour of Rohrlach. Qantas then appealed to the NSW Court of Appeal.

Court of Appeal Decision

The NSW Court of Appeal dismissed Qantas’ claim and upheld the decision of the NSW Supreme Court.

The Court found that the employment agreement was the overarching framework or ‘architecture’ which governed Rohrlach’s employment, including any disputes arising from the agreement (e.g., the temporary transfer, termination and post-employment obligations) . The letter (and deed) sat within the same framework, and accordingly neither ceased to operate or replace the operation of the employment agreement. Whether the restraint within the deed was valid and enforceable was still a dispute in connection to the employment agreement.

Therefore, the Court found that at all times the terms under the employment agreement remained ‘live’ and accordingly, the NSW dispute was enforceable and fell within the scope of the employment agreement. That is, the exclusive jurisdiction clause from the agreement applied and neither the letter or deed contained any inconsistent jurisdiction clause or entire agreement clause to override the employment agreement.

The Court noted that their decision may have been different if the Deed had explicitly stated its own exclusive jurisdiction clause, or an entire agreement clause, which would have in turn replaced and superseded the jurisdiction clause from the employment agreement.

Key Message

The important lesson to take away from this decision is for employers to ensure that each clause of an employment contract is thoroughly reviewed and modified by agreement when there is any variation to the original employment agreement, in particular relating to the continuing operation of exclusive jurisdiction.

This short article is not legal advice and should not be relied as such. 

If you have any legal questions, please contact us for a free discussion. 

Office Number 02 8014 5818

Email: info@checkslaw.com.au

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casenote,employment,litigation

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