Restraint of Trade

Non-competition, non-solicitation and restraint of trade provisions are being litigated more and more given current market conditions.

The general principle is that these provisions are unlawful and deemed "anti competitive" UNLESS the employer has a genuine "proprietary interest" to protect. A proprietary interest may exist in relation to trade secrets, pricing, client, or other confidential information and client relationships.

These types of provisions vary and need to be considered carefully at the time the employment relationship is entered into. Provisions can be included, depending on the employer's needs, to stop an employee, for a period of time, from soliciting or dealing with the employer's clients/employees, or from competing within a geographical area.

Whether a provision is reasonable and enforceable depends on all of the circumstances, including:

  • the industry;
  • the employee's position;
  • the employer's "proprietary interest";
  • type of protection sought by the restraint (eg non-solicitation or non-competition);
  • geographical area and length of time of the restraint;
  • reasons for termination;
  • where the employee is seeking to work.

We regularly provide draft non competition provisions and provide advice and help in relation to enforcement to both employers and employees.

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