A restraint of trade provision is one that has become increasingly prevalent in employment contracts, particularly those regulating the performance of skilled, professional or specialist work.
During the term of employment, the restraint of trade clause may prevent the employee from simultaneously providing services to another employer.
Upon the termination of the employment contract, the restraint of trade clause may seek to prevent the employee from:
- Working within a specific area for a certain period of time; and/or
- Working for a competitor for a period time.
Restraint of trade clauses often become the subject of legal dispute, and in many instances, the clause has been declared invalid on the basis of it being anti-competitive, unreasonable and unfair. When determining the validity of a restraint of trade provision the Court may consider various factors including:
- The nature of the work performed by the employee;
- The locality where the employee is based;
- The effect on the employee if the clause was enforceable, including financial hardship arising from the restraint;
- The effect on the employer if the clause was unenforceable, such as financial implications;
- Whether the clause is reasonably necessary or appropriate in the circumstances;
- Whether the clause is overly restrictive on the employee.
As each restraint of trade dispute is determined according to its own set of discrete facts and circumstances, it is important that you obtain legal advice prior to taking any steps that may be in contravention of the restraint of trade provision, or if you are a business, it is important to obtain advice as to the prospects of the provision being upheld should a dispute arise.
If you require assistance with a restraint of trade matter, we recommend you contact our office and arrange an appointment to see one of our Privacy & Confidentiality Law Solicitors in our Sydney office. By appointment, we can also arrange a time for you to see one of our lawyers at a branch office. For a complete listing please see our "Locations" tab.
This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.
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