Non-solicitation clauses are provisions in an employment contract or deed of release which prevent employees from ‘soliciting’ or ‘enticing away’ the customers, workers or suppliers of their employer for a specified period of time after their employment ends.
What do ‘solicit’ and ‘entice away’ mean?
Most non-solicitation clauses use the words ‘solicit’ or ‘entice away’. Generally speaking, an employee ‘solicits’ customers, workers and suppliers by asking, requesting or seeking to persuade them to end or alter their commercial relationships with that employee’s former employer and to start doing working for or doing business with that employee or a company in which that employee is involved.
It is worth noting that many non-solicitation clauses prevent former employees doing more than ‘soliciting’ or ‘enticing away’. Well drafted clauses can prevent former employees from having discussions with customers, workers and suppliers which could prompt the customer, worker or supplier changing its relationship with the former employer to the former employer’s detriment.
Often, non-solicitation clauses only apply to customers, workers and suppliers with whom the former employee has had ‘direct dealings’. Generally speaking, a ‘direct dealing’ is a meaningful interaction or personal contact between the employee and the customer, worker or supplier. It can include phone calls, emails and face to face conversations.
Are they enforceable?
Non solicitation clauses are only enforceable to the extent that they are reasonably necessary to protect the former employer’s confidential information and commercial interest in maintaining its relationships with its customers, workers and suppliers.
Whether a non-solicitation clause with a given scope will be reasonable depends on a range of factors specific to each former employee, including:
- The quality and quantity of contact between the former employee and clients, workers and suppliers.
- The strength of the former employee’s connections with or influence over clients, workers and suppliers.
- The length of time that it would take for a new employee to develop similar connections or influence.
- The amount of confidential information that the former employee had access to.
- The importance of customer, worker and supplier relationships to the employer’s business.
It is much more common for non-solicitation clauses to be enforceable than non-compete clauses.
How can JFM Law help?
We provide employment law advice to entrepreneurs starting new businesses who need help with their employment contracts, employers dealing with rogue employees, and employees looking to take the next step in their career. 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.
More information
Join our ADLV Law team as we answer your FAQs about Deeds of Release. To access the transcript, click here.
