Restraint of trade south australia

Unlike NSW, South Australia does not have any specific statutory limitations on restraint of trade clauses. The restraints that you may be looking to impose on an employee can vary. As a result of restraint clauses being notoriously difficult to enforce lawyers have devised “step” clauses, that is where there are a number of alternatives in relation to, for example, periods of restraint (e.g., months, months or months) and areas (e.g., the Worl Australia , South Australia ). Australian employers often use restraint of trade clauses to protect their business interests after an employee leaves their company.

Agreements in restraint of trade , like other agreements, must be construed with reference to the object sought to be obtained by them. In such cases as the one before us, the object is the protection of one of the parties against rivalry in trade. The principle that an individual should be free to follow his trade and use his skills without undue interference. However, a restraint of trade clause that does no more than protect the employer’s legitimate interests and which is reasonable will be enforced. A restraint of trade clause in an employment contract which is an outright claim for protection from competition without anything to justify such a claim will be unenforceable.

New South Wales is the only jurisdiction in Australia with legislation relating to the interpretation and validity of a restraint clause. The Act enables a Court to read down a restrictive provision or to ‘re. Standard contracts in New South Wales (NSW), Queensland (QLD) and Victoria (VIC) include a general restraint of trade clause that will apply to a range of circumstances.

In order for a restraint to be enforceable, it must be reasonable. Importantly, the restraint of trade clause relied on was not contained in an employment agreement, but an agreement to sell his shareholding in the company. Restraints must be reasonable. Justice McDonald found that the restraint afforded reasonable protection of the purchaser’s goodwill in the company that could be attributed to the shareholding.

Whilst noting that a ten year restraint period was “at the outer edge of what may be considered to be reasonable”, on balance, the Western Australian Supreme Court granted the injunction restraining the employee until the full matter was heard. The Court identified that the purchase price of the business included a large portion for goodwill, indicating customer loyalty. In a recent judgment the Supreme Court found the restraint of trade clauses were reasonable but Mr Richmond says he has been left devastated by the decision.

The clause may be completely unenforceable, or only partially enforceable. A ‘restraint of trade clause’ is designed to protect the goodwill of a business sold by the vendor to the purchaser. Typically, a restraint of trade clause will prohibit the vendor from carrying on a competing business (or engaging within a competing business) within a certain geographical area or radius over a given time period.

In answering issue 1), a relevant issue is whether the restraint of trade applies. Whether the restraint is against public policy depends on two main questions: first, does the employer have a legitimate protectable interest and secondly is the restraint no more than reasonable for the protection of. In general, restraint of trade clauses are void as they are against public policy. However, a restraint clause is enforceable if an employer can demonstrate that the restraint is no more than is necessary to protect a “legitimate business interest”. A restraint of trade is a provision in a contract of employment that (typically) provides that after termination of employment, the employee is restricted in the work he can perform in that he.

A restraint of trade is an agreement between an employer and an employee, or a provision in an employment contract that restricts an employee from being employed by a competitor of the employer. If a restraint of trade clause is beyond what is necessary to protect the employer, then it will not be enforced by the Court. Instea court cases set the law in this area. In practice, if a court finds a particular aspect of a restraint unreasonable (e.g. the duration of the restraint ) it will delete that part by putting an imaginary line through it. If, after deleting the offending part, the remainder of the restraint cannot continue to operate (e.g. it has such a lack of clarity or certainty that the clause is unworkable) the whole restraint clause will be.

If you are facing a restraint of trade dispute, you should seek independent legal advice. Sources of restraints There are four main sources of restraints against past or present employees. Contractual obligations post-termination, known as “restraints of trade” or “restrictive covenants” are generally used to prevent employees from engaging in a range of activities after their employment comes to an end such as not dealing with or approaching clients, not soliciting clients or employees and not competing with their former employer.

Accordingly the restraint of trade agreement was found to be valid and enforceable. Determining the reasonableness of the restraint of trade clause.