A restraint of trade in an employment contract refers to a clause applying typically when an employee leaves a business or company; it applies to post-employment. Essentially, it is an agreement that an employee will not do certain things against their employers’ interests for a period after their employment. It is vital to be aware of these clauses when signing an employment contract as you may face legal obligations which can be penalised if you do not comply.
There are a variety of restraints that can be imposed upon an employee; however, they generally take one or more of the following three forms:
- A restraint from ‘poaching’ an employee or contractor of the employer
- A restraint from accepting the business of any customer of the employer with whom the employee had dealings
- A restraint from misusing confidential information gained during the provision of the service
The extent of the legal remedies available will depend on how large and imposing the restraint of trade is on the employee, and of course, whether or not the party disputing the clause (employee) or disputing the disobedience of the clause (employer) decides to escalate the matter to court. Generally, monetary damages, profits and orders against the other party can be claimed by the successful party.
If you require any assistance in relation to restraint of trade agreements or think this situation may apply to you, you are welcome to request our factsheet and contact our team of experienced commercial and corporate lawyers by clicking here to submit and online enquiry form or by calling us on +61 2 9223 9166 to arrange a teleconference or appointment.