Restraints of Trade

What you need to know: Employers
What you need to know: Employees
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What are Restraints of Trade and how can they help your business interests?

Restraints of trade are an increasingly common and, in some circumstances, necessary feature of sale of business agreements and employment contracts. Businesses have a vested interest in protecting their goodwill, while employees want to work where and for whom they choose.

The law surrounding restraints is complex. Just because there is a signed contract containing a restraint, it does not mean the restraint is enforceable. Restraints often form the basis of expensive litigation in the superior courts.

Our specialist workplace lawyers have extensive experience in drafting, advising on, and litigating restraint clauses.

Issues with Restraints of Trade for Employees

When signing an employment contract, it’s important that you are aware of any restraints and any obligations you may have to your former employer when your employment ends.

Not all restraints are enforceable, even where the employer or their lawyer says they are. However, these provisions may have serious consequences for you if they are enforceable. Even where restraints turn out to be unenforceable, defending legal proceedings can be costly and time consuming.

Employers who seek to enforce restraints may apply for an interlocutory injunction (court order) preventing you from working for a competitor. Similar orders may even apply to your own business or your new employer. These proceedings are often urgent and expensive, and employees are left with little option but to defend them.

Issues for Employers – Protect your confidential information, intellectual property and goodwill

It is important that you take appropriate steps to protect your business’ legitimate interests in goodwill, client relations and confidentiality.

You can do so with carefully framed restraint clauses in key employees’ contracts. It is important to get restraint clauses right.

Our expert employment lawyers can assist you to prepare enforceable restraints of trade that protect your business, including your confidential information, intellectual property and goodwill.


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