Workwise Employment Lawyers

Terminating an Employsure Contract

Terminating an Employsure Contract

Recently, we have had multiple enquiries from small business owners into the legalities of terminating a long-term contract with the workplace advice provider Employsure.

Employsure have implemented a highly effective sales and marketing system where small business owners often wind up locked into a 5 year contract for services with Employsure, the terms of which may be unsuitable or impractical for the small business owner.

Early Cancellation Terms

Pre-2019, it was generally the case that an Employsure contract would have a 5 year term which would require an employer to pay out 100% of the contract balance for an early cancellation of the contract as seen in Zintix (Australia) Pty Ltd v Employsure Pty Ltd [2018] NSWCA 924.

However, in this case, the early cancellation term was deemed an unenforceable ‘penalty’ and Zintix was not required to pay the cancellation fee because it was not a ‘genuine pre-estimate of loss and damage’ suffered by Emplosure.

Since this case, Employsure has updated their contract terms, being a 5 year period and a 30% cancellation fee of the remaining contract value after the first year.

This contractual term was again challenged by the Australian Competition and Consumer Commission in ACCC v Emplosure [2020] FCA 1409 where Emplosure’s marketing techniques were also called into question with respect to Australian consumer laws.

Unfortunately, in this case, the Court found that Employsure’s updated contract terms were not ‘unfair’ and were found to be necessary to protect Emplosure’s legitimate business interest, therefore making it enforceable.

However, what may be deemed an ‘unfair term’ by the Court and will therefore be unenforceable will be dependent on the individual circumstances of each case.

Take Home

It is critical that business owners carefully consider their workplace relations requirements and their overall budget for this area. When choosing a  workplace advisory provider, business owners should be careful to rush into service agreements and consider all possible options.

If you are locked into an Employsure contract and are unhappy, it is recommended that you contact Employsure about your options and ensure your contract does not automatically renew.

Workwise Employment Lawyers remain available to provide legal advice on this topic.

Workwise Employment Lawyers also provide small businesses with ongoing employment law support under our membership package. For more information please give us a call.

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