This is a guide for employers who want to protect their intellectual property and confidential information by enforcing the restraint clauses in their employees’ contracts.

1. Get legal advice.

This may be obvious, however what I mean is get legal advice on the restraint clauses in your employment contracts before you even engage the employee. The general starting point at law is that all restraint clauses are unenforceable and it is up to you, as an employer, to prove that a restraint is reasonable to protect your business interests. A Court is not going to enforce a 12 month restraint preventing an employee from working for a competitor after only working for you for a short period of time. It is important to get your contracts reviewed on a frequent basis as the law around restraint clauses is always changing.

2. Get evidence.

If you suspect that an ex-employee has been approaching your clients, get evidence! A court will not be inclined to grant an injunction preventing an employee working for a competitor unless there is some evidence of wrongdoing. Just because an ex-employee is working for a competitor and may therefore in breach of a restraint, doesn’t necessarily mean a court will grant an injunction preventing that employee from working for your competitor.

3. Send a cease and desist letter.

Let’s be honest, legal proceedings are expensive and uncertain. You would be surprised how many ex-employees who have been contacting your clients (perhaps thinking they would get away with it) immediately cease all contact once they receive a strong letter from a solicitor (particularly if you have your evidence).

4. Lastly, commence legal proceedings.

Litigation should always be the last resort and should only be commenced if all of the above have been checked off. Otherwise, if you jump in to proceedings too early, they can be difficult to get out of if you find out you were incorrect or not fully aware of all the facts and circumstances. You run the risk of having a costs order made against you.

The benefit of using JFMLAW is that we are a smaller firm who specialise in employment law matters, particularly the enforceability of restraint clauses in contracts. You get the experience at much less of the cost than your larger big city firms.

If you are an employer and you are concerned about an employee leaving and poaching your clients or taking your confidential information, or if you are an employee who is concerned about the enforceability of the restraint in your contract, please give me a call on 02 9331 0266 or email me at chris.lowe@jfmlaw.com.au for a free-of-charge conference.

Chris Lowe

Chris Lowe

Chris focuses on complex litigation involving employment law matters for both employers and employees, particularly matters relating to disputes in respect of restraints of trade and breaches of contract. He also acts for both employers and employees in unfair dismissal matters and general protection claims with significant experience in appearing before the Fair Work Commission.
Chris Lowe