The Courts start by assuming that the clause is void, unless you can convince a Court that the restriction is reasonable, taking into account your particular circumstances at the time when the contract was signed. If you succeed, your former employee can still try to convince the Court that the clause is against the public interest.
There have been a lot of cases about this, as what is 'reasonable' will vary dramatically depending on your circumstances, including the nature of your business and the size of your customer base. One thing that is clear from all those cases is that your chances of successfully enforcing a restraint clause are much higher when the clause is clearly and precisely drafted.
It is also important to remember that former employees have an ongoing duty not to misuse confidential information even after they leave, which means that they cannot take your customer list with them regardless of what the employment contract says.
If you believe that a former employee (or soon to be former employee) is likely to act in a way that will damage your business, it is important to seek legal advice as soon as possible. Hopefully, it will be possible to solve the problem before any damage is done.
If you require assistance, please contact us on 1300 205 506 or by email at sp@sharrockpitman.com.au.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
Mitchell is the Managing Principal of our law practice.
He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.
