AI tools are now embedded in everyday business across Australia. People use them to draft emails, prepare content, summarise meetings and generate ideas, support marketing, administration and client work.

The real legal risk with AI is not who owns the output. Copyright in work produced by employees is owned by the employer under relevant laws. Under a properly drafted contractor agreement ownership of work is already assigned to the business  or intellectual property clause.

The bigger issue is protecting the privacy and integrity of information that goes into the AI tool being used.

When confidential, personal or sensitive business information is entered into AI platforms without safeguards, businesses can expose themselves to serious confidentiality and privacy risk under Australian law. 

If your team is using AI, your employment contracts, policies, procedures and contractor agreements should each clearly address the rules around using AI within your business.

1. The real risk: confidential and sensitive information

AI systems generate responses based on the data they are trained on and the prompts they receive. Free access systems like ChatGPT will automatically “consume” every piece of information input into the system and use that information and your responses to output as part of its learning processes. What this means for your business is that any information input to the AI is now potentially output for someone else’s query.  

If staff or contractors input client information, financial records, personal data or commercially sensitive details, that information may be retained or processed in ways that creates legal risk.

For professional service firms and other businesses collecting personal information, this could breach Australian privacy law requirements and any contractual confidentiality or fiduciary obligations.

The issue is not that AI exists. The issue is using AI without boundaries.

Businesses should clearly define in their contracts and internal policies:

• What AI platforms can be used – some firms are developing their own
• What settings must be activated for the approved AI platform so that information is not used for machine learning and not accessible outside your organisation
• What functions can be carried out using AI tools
• What information can and cannot be entered into AI tools
• When anonymisation is required
• The importance of verifying AI output 

These boundaries should not be informal. They should be documented in employment contracts, contractor agreements and internal AI policies.

2. Employment contracts and workplace policies

For employers, aligning AI usage standards with existing employment law and privacy compliance frameworks is critical.

From an employment law perspective, AI use should be addressed in:

• Employment contracts
• Confidentiality agreements
• Workplace policies and procedures

Employees should understand:

• Whether AI tools are permitted in performing their duties
• What AI tools they are permitted to use for their work
• What client or internal information cannot be entered
• The consequences of misuse of AI tools
• The consequences of breaching confidentiality or privacy obligations

Clear policies reduce risk and protect both the business and the employee. Having the policy without also educating your team about those policies is not enough. You must be able to demonstrate that your workforce knows the policies exist, and understand their obligations.

3. Contractor and subcontractor agreements

While ownership of work is usually already covered through intellectual property clauses or copyright assignment provisions, confidentiality and privacy protections must also reflect modern AI use.

If you engage contractors or subcontractors, your contractor agreement should include:

• A requirement to disclose AI use and the AI platform or tools used
• Warranties that any AI output has been verified for correctness
• Confidentiality obligations that expressly apply to AI use
• Requirements to anonymise information before using AI
• Restrictions on entering client or business data into AI tools without express authority
• Data handling and security standards

This is especially important where contractors are handling client data or commercial sensitive information about your business.

4. Client-facing service agreements and privacy policies

Do your clients know you use AI in your business? Depending on your industry, you may assume that your clients expect that there is some use of AI in your business. However, it is unlikely that your clients have turned their minds to how that might impact them – yet. The more AI is discussed, the more aware people become, and suddenly you have questions about how client data is used. 

If your business provides services and uses AI internally, you should also consider:

• Whether your service agreement needs to include a disclosure about AI use within your business
• How your business is protecting confidentiality when AI tools are involved
• Whether your business is using  AI-assisted processing of personal information
• What additional disclosures should be included in your privacy policy

5. A practical AI governance framework

You do not need complex documentation to start.

A simple three-layer approach works well:

1. An internal AI usage policy for staff and contractors
2. Updated clauses in employment contracts and contractor agreements covering privacy, confidentiality and AI use
3. A review process for work involving client information that may be considered high risk, such as in health services and financial services.

AI is here to stay. Businesses do not need to avoid it. You simply need to control and monitor how it is used through clear contracts and policies.

If your staff or contractors are using AI in client or internal work, it may be time to review your employment contracts, contractor agreements, service agreements, privacy policies and confidentiality clauses to ensure the each reflect the way your business uses AI, the impact that may have on client data and what you are doing to protect client data. .

If you would like to review your agreements or update your AI governance framework, please get started by booking a Short Advice Session with one of our team.

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Joint ventures are a powerful way for business owners to collaborate, share expertise, and accelerate growth. When structured well, a joint venture can deliver strong commercial results. However, a failed joint venture can be costly, time-consuming, and damaging to relationships.

Many failed joint ventures follow the same patterns: unclear roles, poor planning, inadequate agreements, and mismatched expectations. In this Onyx Legal guide, we outline 11 practical strategies to support the success of a joint venture and explain how to avoid the common causes of failed joint ventures.

1. Clearly Identify the Parties to the Joint Venture

One of the most common contributors to a failed joint venture is uncertainty about who is legally involved.

Before entering any joint venture arrangement:

• Confirm the legal identity of all parties
  
• Conduct ABN and regulatory checks

• Ensure individuals and entities are properly documented

We have seen failed joint ventures where profit entitlements could not be enforced because the correct party was never identified. This is a fundamental step to ensuring you receive what you are entitled to. 

2. Choose the Right Joint Venture Structure

Understanding how a joint venture differs from a partnership is critical.

A joint venture is typically:

• Project-specific
  
• Purpose-driven
  
• Time-limited

Most joint ventures operate under a joint venture agreement, rather than forming a new entity. Choosing the wrong structure can expose parties to unnecessary risk and is a frequent cause of failed joint ventures.

3. Define Clear Objectives from the Start

Unclear or shifting goals are a leading reason why joint ventures fail.

Before commencing:

• Define what success looks like
  
• Agree on commercial outcomes
  
• Document expectations in writing
  

Many failed joint venture case studies involve contributors providing extensive unpaid work because profit triggers were vague or constantly changed. Clear objectives are one of the most important factors to a successful joint venture.

4. Decide How Long the Joint Venture Will Last

There is no universal timeframe for a joint venture. The duration should reflect the project’s purpose.

For example:

• Development projects may end once an MVP is completed
  
• Revenue-share ventures may run for a fixed number of years
  

Defining duration, even broadly, reduces uncertainty and supports the success of your joint venture.

5. Plan How Disputes Will Be Managed

Disputes are a reality of commercial collaboration. A strong joint venture agreement should address:

• Deadlock resolution
  
• Exit triggers
  
• Consequences of non-performance
  

Poor dispute planning is a recurring theme in failed  joint ventures examples, particularly where no independent decision-making mechanism exists.

6. Allow for Early Exit Scenarios

Life circumstances change. A joint venture that does not allow for early exit is vulnerable to complete collapse.

Address in advance:

• Voluntary exits
  
• Forced exits
  
• Fair value allocation
  

Fair exit provisions significantly improve the outcomes of a joint venture by reducing conflict when circumstances change.

7. Prepare for New Parties Joining the Venture

Some joint ventures evolve over time. If growth is anticipated:

• Allow for additional parties
  
• Define onboarding terms
  
• Protect existing contributions

Failing to plan for expansion can destabilise an otherwise successful arrangement and lead to a failed joint venture.

8. Allocate Roles and Responsibilities Precisely

Assumptions destroy joint ventures.

Successful ventures clearly define:

• Who does what
  
• Who pays which costs

• Who is accountable for milestones

Unclear responsibility allocation is a major contributor to failed joint ventures, particularly when timelines slip or workloads become uneven.

9. Address Failure to Perform

Even well-intentioned parties may fail to meet their obligations under the joint venture agreement. .

Your agreement should cover:

• What constitutes failure
  
• Remedies and timeframes
  
• Dissolution triggers
  

Planning for underperformance is one of the most effective ways to protect the success of a joint venture.

10. Determine Intellectual Property Ownership

Intellectual property disputes frequently arise after a joint venture fails.

Clarify upfront:

• Who owns created IP
  
• What happens on exit
  
• Whether licences survive termination
  

Clear IP provisions reduce legal risk and support the long-term success of joint ventures.

11. Appoint Clear Project Leadership

Joint ventures require strong management.

Effective leadership involves:

• Oversight of deliverables
  
• Communication management

• Authority to break deadlocks

Many international failed joint venture examples stem from the absence of a clear decision-maker.

Final Thoughts: Preventing Failed Joint Ventures

Joint ventures can deliver innovation, growth, and shared success, but only when designed properly. Most failed joint ventures are preventable with careful planning, realistic expectations, and a well-structured joint venture agreement.

Strong foundations lead to better outcomes, improved collaboration, and higher chances of achieving the intended outcomes of a joint venture.

If you are considering a joint venture or want to strengthen an existing arrangement, legal advice early in the process can help you avoid the costly mistakes that lead to failed joint ventures.

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A common question we hear from business owners is “what is a joint venture?”, often followed closely by “how is a joint venture different from a partnership?” A joint venture (often referred to as a JV) is a business arrangement where two or more parties collaborate for a specific purpose while remaining independent businesses.

A joint venture is an association between parties for mutual benefit, usually created for a specific project, goal, or a limited period of time. Unlike partnerships, a joint venture allows each party to retain control over their core business while sharing resources, expertise, markets, or capital.

Joint ventures can be formed between companies in the same industry or completely different sectors, making them a flexible and strategic way to grow without merging businesses.

How Does a Joint Venture Work?

Joint ventures are commonly used where parties can each contribute something different to achieve a shared goal.

For example:

• In property development joint ventures, one party may own the land, another may provide funding, and another may manage construction.

• In infrastructure or telecommunications, companies may form joint ventures to reduce costs and share expensive resources.

• In international joint ventures, foreign companies often partner with local businesses to enter new markets and access existing customers.
  

Joint ventures may involve two or more parties and can include individuals, companies, or trusts. There is no single formula for how a joint venture must be structured.

Joint Venture Agreement: Why It Matters

Most joint ventures are governed by a joint venture agreement, which sets out:

• Each party’s rights and obligations
  
• Ownership interests and profit-sharing arrangements

• Decision-making authority and dispute resolution processes

• What happens to assets (including intellectual property) when the venture ends

Some joint ventures are contractual, while others are incorporated joint ventures, where a separate company is formed. An incorporated joint venture is more likely to become a saleable asset in the future.

Given the risks involved, having a properly drafted joint venture agreement is critical.

Joint Venture Examples

Common joint venture examples for small and growing businesses include collaborations between:

• Software developers and industry experts
  
• Digital marketers and service-based businesses
  
• Property owners and property developers
  
• International companies and local distributors
  
• Financiers and businesses seeking capital
  

These arrangements allow businesses to offer products or services they could not provide independently.

Benefits of a Joint Venture

Understanding the benefits of a joint venture helps determine whether this structure is right for your business. Common joint venture advantages include:

• Business diversification
  
• Entry into new or international markets
  
• Access to new distribution channels
  
• Leveraging another party’s expertise or resources
  
• Reduced costs and shared risk
  
• Defined scope, rewards, and responsibilities

   

• Potential to create a saleable asset

   

For many businesses, the flexibility of a joint venture makes it an attractive alternative to long-term partnerships or mergers.

Risks and Disadvantages of a Joint Venture

Like any business arrangement, there are joint venture disadvantages and risks to consider. Common issues include:

• Unequal effort or commitment between parties
  
• Loss of time or money
  
• Disputes over control or decision-making
  
• Intellectual property or confidentiality risks
  
• Reputational damage if the venture fails
  

We often see joint ventures fail because expectations were unclear or not properly documented from the outset.

Joint Venture vs Partnership: What’s the Difference?

A frequent comparison is joint venture vs partnership. While they may appear similar, there are important legal differences.

Partnership

• Long-term, whole-of-business arrangement
  
• Joint and several liability
• Each partner is responsible for the actions of the others
• Changes in partners usually require a new partnership

   

Joint Venture

• Project or goal-specific
• Several liability only
• Parties remain independent businesses
• Joint venture parties can enter or exit without restructuring the entire venture

Because of these differences, we generally discourage referring to a joint venture as a “partnership”.

Is a Joint Venture Right for Your Business?

A joint venture can be a powerful growth strategy when structured correctly. However, the benefits and risks of a joint venture should always be carefully weighed, and the arrangement properly documented.

If you’re considering entering a joint venture, professional legal advice can help ensure the structure, risk allocation, and joint venture agreement support your commercial goals.

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Running a business is challenging, and managing your workforce to ensure it is the right size for your business needs is rarely easy or predictable. For many Australian businesses, workforce planning and redundancy decisions arise unexpectedly rather than as part of long-term planning.

The closure of a major client, the completion of a significant project, or an unexpected slowdown in market demand can all affect business profitability. These events often prompt a business review to assess whether the current workforce structure remains sustainable and compliant with Australian employment law.

Business reviews may be triggered by discussions with an accountant about cost reductions, during budget planning, or as part of end-of-year or beginning-of-year processes. In many cases, these reviews raise the question of whether a role redundancy may be necessary to protect the ongoing viability of the business.

Why redundancy discussions are rarely planned

Most businesses do not have a fixed schedule for conducting workforce reviews. Instead, redundancy planning is commonly reactive, triggered by financial, operational, or market changes rather than proactive workforce planning.

Unfortunately, a reactive approach can increase the likelihood of employee claims or disputes, particularly where affected employees question the timing or motivation behind the decision. This is why careful documentation and clear communication are essential throughout the redundancy process.

Is there ever a right time to have a redundancy discussion?

There is never a perfect time to conduct a business review that results in redundancies or has the potential to lead to redundancies. Employers frequently ask whether redundancy discussions should be delayed if an employee has commenced sick leave, is involved in a workplace investigation, or is undergoing a performance review.

In practice, nothing an employer does can entirely eliminate the risk of an unfair dismissal or general protections claim, regardless of whether such a claim is justified. Business operations are rarely linear, and multiple employment-related issues often occur at the same time.

The importance of a documented business review

The key to managing redundancy discussions lawfully and effectively is to clearly identify and document the purpose of the business review, its timing, and its intended outcome. Employers should also document why the review is being undertaken at that particular point in time.

This documentation should be shared with the workforce to ensure transparency and consistency. Treating all employees the same throughout the redundancy consultation process is critical to reducing legal risk.

How long should a pre-redundancy business review take?

Yes, a business review can be completed in a week.
No, a pre-redundancy business review does not need to take months.
No, a business review that may result in redundancy does not need to be delayed due to the personal circumstances of an employee currently occupying the role, subject to employer obligations under Australian employment law.

The scope and timeframe of the business review should reflect its purpose and provide sufficient time to assess how the business structure can be adjusted to meet operational needs.

Focusing on roles rather than people

When reviewing workforce requirements, the focus should be on roles, tasks, and business functions rather than the individuals currently performing them. Employers should consider what work is essential to continued business operations and whether the current structure is the most efficient way to deliver that work.

For example, where forward work is limited in a particular area of the business, certain roles may no longer be required. Where employees cannot be redeployed or cross-trained, those roles may become genuine redundancy candidates.

Redundancy process overview

To reduce risk and ensure compliance with Australian employment law, a structured redundancy process should be followed:

• Identify the need for a business review and clearly define its purpose
• Document the rationale for the review
• Set clear and reasonable timeframes
• Notify the workforce in writing of the review and its purpose
• Consult with employees both in writing and in person
• Decide on required structural changes, including roles to become redundant
• Identify potential redeployment opportunities
• Meet with affected employees to confirm redundancy, timing, and redeployment options
• Process redundancies in accordance with employment contracts and legal obligations

The redundancy process begins by giving employees notice of the business review and its timing. During the review, employers should assess roles based on actual functions and responsibilities rather than position descriptions alone.

Consultation, redeployment, and practical considerations

Once potentially affected roles are identified, individual consultation with employees in those roles must occur. Employees may provide suggestions to avoid redundancy, although not all suggestions will be commercially viable.

Employers must consider whether the functions of a redundant role will continue to be required and, if so, how those functions will be carried out. Redeployment should also be considered where suitable vacant roles exist.

Redeployment does not require the creation of a new role. It involves offering an employee an existing vacant role for which they have appropriate skills and experience. In small businesses, redeployment opportunities may be limited or unavailable.

Common scenarios that concern employers

Redundancy discussions do not automatically need to be delayed where an employee is:

• undergoing a performance review
• suspended or under investigation
• on sick leave
• on maternity or parental leave
• covered by discrimination legislation
• involved in a workplace complaint
• recently redeployed
• on extended leave
• requesting a change in employment status

In each case, employers must be able to demonstrate that the redundancy decision achieves the documented purpose of the business review. Consistent treatment of employees is essential to reducing discrimination and unfair dismissal risk.

Need advice on redundancy and workforce planning?

If you need guidance on workforce planning, redundancy consultation, or managing disputes arising from a redundancy process, booking early employment law advice can significantly reduce risk.

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Going into business, whether it’s the first time or the tenth, can be exciting and terrifying all at the same time. What if it works? What if it doesn’t?

Reflecting on some of the transactions we’ve been involved in over the years, we’ve identified the following 5 mistakes purchasers often make when buying a business. Many of these issues mirror problems we see in reviewing a buy-sell agreement, or other types of business contracts and data sharing agreements during transactions.

1. Poor or Non-Existent Due Diligence

Due diligence is your opportunity to verify whether or not the business will work for you. You don’t get to have a full inside look at how everything works, but you certainly get to test the numbers. We’ve prepared a brief and simple Due Diligence Checklist to help you identify the areas where you could be asking questions.

It is important in your due diligence to work with a management accountant. The reason you want a management accountant is that they should be able to help you with cashflow forecasting in anticipation of completion. Cashflow forecasting looks at all the costs and expenses you will need to cover once the purchase is complete, as well as covering any loan repayments you will be making after completion and ensuring you have working capital available when you get started.

Profits look good on paper, but cash is king and if you don’t have the cash to keep the business running after completion, you may need to renegotiate the purchase price or consider a different business. These are the same types of risks we flag when reviewing a data protection agreement, data processing agreement, data contract, or distribution agreement that affects the business operations.

2. Understanding What Stock You Need

Not every business will have stock that needs to be transferred to you as the purchaser and not every agreement deals with it adequately. Things we have seen go wrong with stock usually arise because no one thought about it too much before the completion day.

Representations about a business in the advertising pre-sale are not always accurate. This is especially the case if the seller tells you they have never done a stocktake in their life. If the seller doesn’t really know what stock they have, how can you determine what stock you need to maintain the same profitability of the business after completion?

If you see a stock estimate in advertising, ask for the verification behind it. Once you’ve entered into the due diligence phase you should be permitted to access what information the seller has about existing stock, even if the specific stock items are de-identified.

Compare the stock levels you are purchasing against the sale levels at the same time the previous year. Will there be enough stock on hand to meet demand, and if not, how are you going to get it quickly?

If the stock is unfamiliar to you, or a large volume, consider hiring a professional stocktake firm to come in and complete the stocktake in the days before completion. It is worth the money to properly identify what you are and are not buying. You shouldn’t be paying for stock that is obsolete, or which cannot be sold to the existing customer base, or which is about to expire. It’s going to cost you to get rid of it.

On the other hand, if the stock is only $100,000 in a $10,000,000 purchase, you might consider fixing an agreed price with the seller rather than doing a stocktake. The contract should have specific provisions around what can and cannot be done with that stock during the contract period, and what happens if it’s missing at completion, but losing $5,000 in stock is probably less expensive than completing a formal stocktake in that scale of transaction.

If you’re not taking over premises, you also need to consider moving the stock and what that will entail. $760,000 worth of $50 widgets is a lot of stock. As the purchaser, you are going to be responsible for packing it and moving it in a fixed timeframe. How many people, how much equipment and how much time will you need to do that?

3. Not Getting Lease Advice

You can negotiate an assignment of a lease. You don’t have to agree to the same terms the seller had with the landlord.

If the seller has been in the premises for a long time, it is possible there is quite a bit of maintenance due before your occupation of the premises will be compliant. You also need to consider whether the building has been properly maintained.

For example, fire safety obligations now are a lot different to what they were 20 years ago. If the landlord hasn’t brought the premises up to date, make sure they do before you take over. If there are other compliance obligations you have to meet to store the stock on the premises, make sure all compliance is up to date. As a new tenant you won’t get the benefit of obsolete provisions.

If there are make good provisions in the lease, you want to ensure your assignment doesn’t make you liable. It can cost as much to de-fit a building back to bare walls and clean paint as it can to complete a fit-out. If your lease only lasts another year after you take over, you could be up for huge costs in the short term.

4. Not Getting Proper Contract Advice

If you are going to invest $3,000,000 in buying a business, why wouldn’t you get proper advice? Yes, it costs money. The seller is prepared to pay 15% of the purchase price to the broker, yet we’ve had buyers begrudge 3–5% of the purchase price for proper advice?

Addressing potential issues early and before you spend a lot of money is better than ending up with unending costly problems after completion.

Your lawyer and your management accountant need all the information you have about the business, not just what you think is important. It also helps if we know your plans for the business in the next 3–5 years. With better context, we can provide better advice. It is a false economy to say “just look at this for me” or “I just want advice about this” without providing all the information your advisers need.

We worked with a purchaser after they had signed the contract and who only wanted a “red flag” advice about the contract and were prepared to do the rest of the work on their own to “save money”. They hadn’t even thought about moving stock before completion and hadn’t advised us they wanted our support in that area. When it became an issue on the day of completion, they needed our help.

They had not asked us to advise about or be involved in completion previously. There was significant frustration on all sides. We no longer offer limited services for business sales. These situations frequently involve reviewing key documents such as a contract for the sale of business , copyright agreement, exclusive distribution agreement, exclusive distributor agreement, or even a buyer’s agent agreement that is tied to the transaction.

5. Being Emotionally Tied to the Purchase

Savvy business advisers will always tell you to buy on the numbers and not on the emotions. Not everyone can be that clinical.

For many people purchasing their first business it is very emotional. It’s a new relationship and as a purchaser you might have rose coloured glasses on. You might be so focused on getting the purchase complete you forget to look too closely at some of the important details. Some people will actively refuse to hear anything negative about their new acquisition.

Most contracts have points at which you can walk away as the purchaser without significant losses. No matter what you have spent in the lead up, it will be less than what you could lose after the purchase if there is something wrong with the business. Work with your advisers to understand those triggers and use them if it turns out the transaction is not right for you.

We’ve worked with a buyer who told us “I’ve spent $500,000 already on this transaction, there is no going back now.” Hindsight showed that he would have been far better off walking away at that point than proceeding. He ended up losing over $20,000,000.

We’ve also worked with purchasers who have gone through all the steps to get advice and then walked away before the contract is signed, when the problems we helped them identify couldn’t be resolved before the deal was completed. One client did it three times. For the first three potential transactions the businesses they were looking at had all effectively stopped operating and the client would have been purchasing the right to occupy premises under a lease only, with no immediate revenue. You need deep pockets if you are going to invest in re-launching an already failed business.

There are many benefits to buying existing businesses, especially if you can consolidate with an existing business and save some costs, or promote the new business to your existing clients, and vice versa, to increase sales. Be confident you understand what you are taking on and get help before you reach the point of no return. Reviewing every buy-sell agreement, data sharing agreement, distribution agreement, or copyright agreement template that impacts the business will protect you from costly surprises later.

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AI in the workplace, confidentiality obligations, employment agreements, contractor agreements, business contracts Australia

Artificial intelligence is now part of everyday business operations, particularly in the modern workplace where AI tools are increasingly used by employees and contractors. From drafting emails and preparing proposals to transcribing meetings and analysing data, AI tools are being used by employees and contractors more often than many business owners realise.

What has not kept pace is how most businesses manage AI use from a legal and risk perspective.

While AI can improve efficiency, it also introduces real confidentiality and data protection risks. These risks are often hidden, informal, and unintentional, making them easy to overlook until something goes wrong.

AI use is often informal and undocumented

In many businesses, AI use is not part of a formal process. Employees or contractors may use free or low-cost tools on their own initiative, without approval, guidance, or clear boundaries.

This creates a problem. Confidential information does not stop being confidential simply because it is entered into an AI system. Client data, employee information, commercially sensitive material, and intellectual property can all be exposed if the wrong tools are used.

Why free AI tools can create serious risk

Many AI products, particularly free versions, have limited privacy controls. Some retain data, use inputs to train their systems, or store information outside Australia. This can directly conflict with confidentiality obligations, privacy laws, and contractual commitments your business has already made.

Once confidential information is entered into an AI platform with poor privacy protections, it may be impossible to retrieve or control how that data is used in the future.

Policies alone are not enough

Some businesses have started introducing internal AI or technology policies. While policies are helpful, they are not a complete solution.

Policies guide behaviour, but they do not always create enforceable obligations. If a dispute arises, contracts are what matter most. Employment agreements and contractor agreements are the documents that clearly define responsibilities, standards, and consequences.

Without appropriate contractual wording, businesses may struggle to manage accountability when AI use leads to confidentiality breaches or data exposure.

Why agreements should address AI use directly

Modern agreements should reflect how work is actually performed today. This includes addressing the use of AI tools in delivering services.

Well-drafted clauses can:

• Limit the types of AI tools that may be used
• Require appropriate privacy and data protection safeguards
• Ensure transparency around AI-assisted work
• Confirm that human review and responsibility remain in place

Importantly, this is not about banning AI. It is about setting clear, sensible boundaries that protect the business, its clients, and its confidential information.

A proactive step for business owners

If your employment or contractor agreements were drafted before AI became widely used in the workplace, they may not adequately address confidentiality obligations, data protection risks, or acceptable AI use. Reviewing and updating business contracts now is far easier than responding to a data breach, confidentiality issue, or contractual dispute later.

AI is changing how work is done across Australia and globally. Your contracts should reflect that reality to ensure your business remains protected.

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Hiring offshore staff can be an efficient and cost-effective way to grow your business. However, many Australian employers don’t realise that even overseas workers can be protected under Australian employment laws. A recent Fair Work Commission case has highlighted how easily a simple oversight in contract formation can lead to unexpected Fair Work compliance obligations.

This article explains what business owners need to know, how to reduce legal risk, and the steps to ensure compliance when hiring offshore.

1. Why Fair Work May Apply to Offshore Workers

The Fair Work Commission recently confirmed that overseas contractors may still fall under the Fair Work Act Australia if their employment contract is considered to have been formed in Australia. In other words, it’s not about where your worker performs their duties, it’s about where the employment contract was formed.

In the Pascua v Doessel Group case, a worker based in the Philippines claimed protection under Australian employment law. The employer argued that because the work was performed overseas, Fair Work should not apply. However, the Commission found that the contract was formed in Australia because the employer found out about the worker’s acceptance of the contract while the employer was physically in Australia.

That single factor was enough for Fair Work coverage to apply.

2. The Importance of Contract Formation

The location of contract formation determines which country’s employment laws apply. Under Australian law, a contract is typically formed where the final act of acceptance takes place. This means that even a verbal acceptance over Zoom, or an emailed “yes” from an offshore worker, could make that agreement subject to Australian law if the acceptance is received while you’re in Australia.

This is particularly relevant for business owners, professional services firms, HR managers, and consultants who hire remote contractors or virtual assistants overseas and want to maintain remote workforce compliance. Without clear contract formation processes, businesses in Australia may inadvertently bring offshore employment  under Fair Work coverage.

3. How to Protect Your Business

There are several steps Australian employers can take to avoid unintentional Fair Work obligations when hiring internationally:

• Define where and how contracts are formed. Include a clause stating that acceptance must occur outside Australia.

• Use wet-ink signatures and postal acceptance. Digital signatures and email confirmations can be problematic.

• Document every step. Keep proof of where and when acceptance occurred. Postal receipts can serve as evidence.

• Avoid early starts. Don’t let offshore staff begin work until the signed contract is physically received in the post.

• Review your contracts regularly. Employment laws evolve. What was compliant two years ago may not be today.
  

By implementing these safeguards, businesses can reduce legal exposure and strengthen legal protection for employers, demonstrating due diligence in their compliance practices.

4. Common Myths About Offshore Hiring

Myth 1: Overseas workers aren’t covered by Australian law.
Reality: If the contract was formed in Australia, they may be.

Myth 2: Digital agreements are always valid internationally.
Reality: Valid doesn’t mean exempt, digital acceptance may still trigger Fair Work obligations.

Myth 3: Legal risks only arise for large companies.
Reality: Even small businesses using offshore virtual assistants can be affected.

Understanding these misconceptions helps business owners make informed decisions and avoid accidental non-compliance.

5. Case in Point: Lessons from Pascua v Doessel Group

In this landmark case, the worker claimed entitlements under Australian law despite living and working in the Philippines. The Commission’s decision hinged entirely on contract formation, specifically, that the contract was accepted while the employer was in Australia.

The case reinforced one key message: location of notice of acceptance determines jurisdiction.

To avoid similar disputes, businesses should adopt a formalised process for outsourcing contracts and contract execution. That means ensuring contracts are physically signed overseas, mailed back, and logged with a clear posting date.

This case also highlights the importance of governance and documentation, both of which can be streamlined through modern software systems  or CRM tools that track contract workflows.

6. Practical Checklist for Employers

Before hiring or renewing an agreement with an overseas contractor:

• Include a clause specifying that acceptance must occur outside Australia.
• Require wet-ink signatures and a physical return of the contract.
• Record the timeline of offer, acceptance, and delivery.
• Do not start work until the signed contract is received.
• Conduct periodic contract audits to ensure compliance.

Implementing these steps can save your business from potential disputes, unexpected wage claims, or Fair Work investigations by improving legal compliance for businesses.

Final Thoughts

Hiring overseas talent opens exciting opportunities for Australian businesses, but it also introduces new legal complexities. The Fair Work Commission’s recent decisions make one thing clear, contract formation matters.

By understanding how Fair Work for overseas workers can extend to offshore staff and taking preventive measures, you can protect your business, maintain compliance, and scale confidently.

At Onyx Legal, we provide Australian business legal advice, helping business owners draft and review offshore agreements that minimise legal risk while supporting sustainable growth.

Need clarity on your contracts?

Book a Short Advice Session to ensure your offshore engagements are compliant and secure.

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