Restraint Clauses in Employment Contracts

Restraint of Trade or Restraint Clauses appear regularly in employment contracts.

Most people do not think twice about them and are just thankful they secured the job or position.

However, Restraint Clauses have the potential to have very serious consequences when the time comes to move on and leave your employment.

As unlike some other Australian States in NSW Restraint Clauses are presumed valid, unless they are against public policy.

What this means is that the clause saying you cannot work for another business that competes with your current employment for a period nominated and an area nominated is ENFORCEABLE unless the Court finds it against free trade and competition.

For this reason, it is common for employers to have a cascading restraint time and restrain area.

For instance, in many employment contracts in NSW the restraint period will appear as

a.     3 months

b.     6 months

c.      12 months

AND the restraint area will appear as

a.     ALL of Sydney

b.     ALL of NSW

c.      ALL of Australia

This is to allow the Court to ‘read down’ the clause and find a period and an area which the Court will consider reasonable to protect the legitimate interest of the employer.

HOWEVER, imagine not been allowed to work in ALL of Sydney when you leave your employer for someone offering better pay doing the SAME JOB!

So, before you sign and celebrate contact an experienced employment lawyer to get legal advice about your employment contract.

At Rep-Revive Criminal & Employment Lawyers we offer a low-cost initial consultation of $160 to give you advise about any Restraint Clauses in your new employment contract, this is to ensure you can make an informed decision. Contact us on (02) 9198 1996 or see our website at www.rpr5.sydney for more employment related updates