The Australian Labor Government has recently released draft legislation that would restrict the use of non-compete clauses in contracts of employment. If the proposal is passed in its current form, it would be a first for two reasons: (1) it would be the first time the Federal Government has intervened in the post-employment restraint space
Many Australian businesses use contractual restraints of trade to protect confidential information and customer relationships. In this update we answer frequently asked questions about the future of restraints of trade in Australia, and consider options available to companies in the event that some types of restraints are no longer available.
Are restraints of trade still
Whether there will be a “Great Resignation” in Australia has been fiercely debated for weeks. But whatever the different viewpoints, stabilisation, recovery, and growth in 2022 will be critical for most businesses. Timing is everything – the need for growth coincides with widespread fatigue and burnout among the workforce, ongoing uncertainty associated with the new
When an ex-employee goes to a competitor or starts poaching clients or staff, employers often look to a restraint of trade clause to protect key business assets such as client relationships or company confidential information.
Often a quick decision needs to be made: apply to the Court to stop the ex-employee, or wait and sue
An enforceable restraint of trade can be a key business asset, giving an employer time to recover when a senior employee has left the business for a competitor. Like a good insurance policy, it’s a big relief to have it when you need it.
Australian law regarding restraints of trade has its history in
“It has become increasingly difficult to make
Their high profile nature means it is timely for big business to re-evaluate their restraints of trade to make sure they are effective –
Drafting and enforcing post-employment restraints has a lot in common with good medicine.
It is necessary to prescribe only the “minimum effective dose” – the amount necessary to produce the desired outcome with minimum side effects. Draft a post-employment restraint too narrowly, and it provides no remedy. Draft a restraint too broadly, and toxicity sets in – it won’t be enforceable.
Continue Reading Prescribing the “minimum effective dose”
Effective restraints of trade protect businesses which rely heavily on human capital from damage that sometimes can’t be undone. These restraints – usually sitting in an employment contract – can be a key business asset.
Others might think about it as an insurance policy. The capacity to preserve customer connections, protect confidential information and discourage key executives from setting up their own business or moving to a competitor can be critical to information rich businesses operating in a competitive market. As we pointed out in our previous blog piece on post-employment protections The difference between winning and losing restraint litigation is often good housekeeping, ensuring the currency of your restraint provisions is an important exercise in risk management.
Continue Reading You get to write the script for this story…