Restraint of Trade Clauses

Posted 22 September 2014 by Mike Johnson Restraint, employment agreements;

 Many Employment Agreements have them – many more employers want them – but what is needed to be able to rely on one?

From time to time the Courts set out the answer to this question – and first and foremost you have to understand these clauses are considered to be “contrary to public policy and unenforceable”. But there are exceptions, so if you want to rely on one …

• It must be no wider than is reasonable in the circumstances – to protect a proprietary interest
• The period should be no longer than the company needs to get a replacement in and ensure customers are able to be assured of ongoing service
• The geographical spread must be linked to the company’s influence
• And clearly must be linked to the particular risk the individual employee poses

If you have an interest to protect then let’s work carefully on the wording. If you just want to frighten your employee then go ahead, but don’t expect to rely on it.