So, your employment has come to an end and you notice a tricky clause headed ‘Restraint of Trade/Non-Compete’ in your employment contract.
Whether you’ve resigned, were dismissed or were made redundant, you want to move on as soon as possible and secure your next role.
What does the restraint of trade mean for you going forward in your job search? Are you really restrained from working in the same industry throughout Australia for the next two years?
You could potentially save a lot of time and money by following these steps:
1. Obtain Legal Advice
Yes, this one sounds obvious. However, an employment lawyer is best placed to advise you on exactly what you are restrained from doing, how enforceable the clause is and what you can do to minimise the potential of legal proceedings.
2. Review the Clause Carefully
Restraints of trade are not a ‘black and white’ area of the law. Just because the clause is expressed in a certain way does not mean it will be enforceable. Likewise, sticking to the view that ‘restraints are never enforceable’ will likely lead you into hot water.
The enforceability of a restraint depends on many factors, including your individual circumstances, the length of your employment, and your salary, among other things.
3. Don’t Confuse it With Other Contractual Clauses
“I only had a short restraint period and now it’s over! I can approach competitors of my former employer with all this confidential information now.”
Right? Wrong. Don’t confuse a restraint of trade with your continuing obligation to protect the confidential information of your previous employer.
4. Advise Your New Employer
If you do have a restraint of trade in your contract which has the potential to cause trouble in the future, it’s important to bring this to the attention of your new employer. Many employment contracts these days require an employee to warrant that they are not bound by any restraint of trade from previous employment.
If you have a restraint but have received legal advice that it is unlikely to be enforceable, most employers will be sufficiently reassured with that advice.
Contact JFM Law on (02) 9199 8597 for a no obligation chat. If you would rather get in contact through email, send your question through or by email at wehelp@jfmlaw.com.au.
The information contained in this post is current at the date of editing – 19 January 2024.
