Restraint Clauses

Employment contracts in Australia frequently include a restraint of trade clause. This is to protect business interests after an employee leaves. Most commonly, it’s applied in contracts with senior professionals as well as in agreements for the sale of business.

The main types of clauses are;
• Non-compete clauses that prevent a person from competing with their former employer for a certain time period. This could prevent them from starting their own business, or working for a competing business.
• Non-solicitation clauses that prevent a person from soliciting their former employer’s clients for a certain time period.
• Non-recruitment clauses that prevent a person from recruiting their former employer’s employees for a certain time period.
• Confidentiality clauses that prevent a person from using their former employer’s confidential information.

Why you may need advice on a restraint of trade clause

Individual

You may have an existing employment agreement with a valid restraint clause which prohibits you from working with a competitor. You need to be careful and understand your options before accepting a new employment contract to ensure you don’t breach an existing, valid clause. You could be liable for damages if you break your existing employment contract which contains any of the above clauses.

Business

Your confidential and intellectual property deserves to be correctly protected and a restraint of trade clause will ensure your business interests are upheld. If you suspect an employee may have breached the clause, it’s important you investigate properly and act within the correct procedural rules. It’s also important to have a reliable employment contract with relevant restraint clauses which you can confidently send to future employees, so consult with a professional to develop one for your business.

Whether you’re an individual or a business, speak to one of our partners who will examine your case and give you the right advice. Gorval Lynch are experts in employment and contract law and help individuals and businesses understand and interpret their restraint clauses, as well as draw up new contracts to suit business requirements. Give us a call today for a confidential consultation and to find out where you stand.