Many contracts of employment contain terms that seek to limit what work a person may do after they leave a job. Turner Freeman Lawyers is able to advise its clients on restraints and act for them in claims challenging restraints in place.
What is a restraint of trade?
Employment contracts and partnership agreements often contain clauses that seek to control the behavior of the worker after they have left the employment (or partnership). These provisions are generally known as restraints of trade.
The provision will often prevent a departing employee or partner setting up in competition and working for competitors. Restraint of Trade clauses are important to businesses that heavily rely on client relationships and where employers are trying to protect their legitimate business interests.
In NSW, the Restraint of Trade Act 1974 provides that the Courts will only enforce clauses that restrain trade reasonably.
Our expertise in this area will assist you in ensuring that you make the right decision, whether you are an employer wishing to engage the services of a new employee, or if you are an employee leaving your current position and wishing to ensure you are not in breach of any restraint of trade clauses.
Is the clause reasonable?
Matters which the court will take into account in deciding whether a restraint of trade clause is reasonable include:
- Time period of restraint: the restraint must be for a period of time which is necessary to protect the business interest;
- Geographical area of restraint: the area covered by the restraint must be reasonable, and not prevent the employee from working altogether;
- The restraint must protect a legitimate interest of the employer, for example its customer lists or goodwill.
If you are concerned about an employee or partner leaving your employment and the effect this may have on your business, please contact Turner Freeman Lawyers to discuss the best course of action.
If you are an employee or a partner leaving employment and are concerned about what restrictions may be imposed on you upon termination, Turner Freeman Lawyers will assist you in reducing the likelihood of you being liable for breach of any restraint of trade clause.