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Restraint of Trade – how it affects you

Restraint of Trade – how it affects you 1024 768 MJT Law - Brisbane Employment Lawyers

Quite often when an employee is looking at moving on their first thought is to take clients with them.  This can be a minefield because of the legal restraints they have agreed on in their employment contract.

It is legitimate for a company or business to protect its intellectual property when operating.  Protecting goodwill is common and is usually done by inserting a non-compete or restraint of trade clause into an agreement or contract.

Restraint of trade clauses are generally difficult to enforce; this is because the courts do not want to restrain or stop a person from carrying on a business or trade.  For a restraint of trade to be acceptable it must not go any further than what is necessary to protect a legitimate business interest.  For example, preventing an employee from poaching clients which they have met during the course of employment may be reasonable but preventing that person from placing a bona fide job advertisement and attracting clients that way is not.

It is ultimately up to the Court to decide whether a restraint of trade clause is valid or not and whether a worker or employee has breached that clause.  When considering a clause, it is important to look at the following:

  1. what is the activity that is prevented or stopped;
  1. whom is the clause trying to prevent from the activity;
  1. how long must the activity be stopped; and
  1. where is the clause attempting to prevent the activity.

If the balance between the interests of the business/company and the worker are unreasonable then then the Court may consider the restraint of trade clause to be invalid.

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