The remedy commonly sought by employers faced with an employee’s breach of a restraint clause is an injunction, which is a court order prohibiting the employee from acting in a way, or from continuing to act in a way, that breaches the restraint. For example, an injunction may prevent the employee from working for a competitor or from using certain confidential information. To avoid breaches of these clauses, employers should consider the following tips:

  1. Seek undertakings

Having your solicitor send a letter to your exiting employee or their solicitor seeking undertakings for their compliance with the restraint/s (and threatening legal action if not provided). This sort of action is often enough to obtain such undertakings.

  1. Act quickly to pursue breaches

If a breach of the restraint is identified, employers should act quickly and bring the appropriate proceedings for injunctive relief. This will include seeking legal advice on the restraint or restraints’ validity in respect of reasonableness and any issues of interpretation or certainty which may arise. This is particularly relevant in relation to cascading clauses (discussed above). Engaging counsel who is familiar with restraint matters would also be prudent conduct.

  1. Identify the information or customer/client/staff connection under threat

An employer must identify the legitimate interest it is seeking to protect and further prove that it is under threat. For example, this may be done by examining an employee’s work computer or social media, or an urgent discovery or subpoena of the employee’s personal email accounts or other relevant third-party material may be relevant. Evidence will need to be put to the court demonstrating the legitimate interest, and how it is threatened by an actual or threatened breach. If an employer is seeking damages, it will need to demonstrate the relevant loss.

  1. Demonstrate how the restraint is reasonably necessary to protect the legitimate business interest:

Finally, it should be noted that the onus for proving a restraint is reasonable falls on the party seeking to enforce it (the employer).

 

How can we help?

If you would like assistance regarding a restraint of trade, or other employment or contractual matter, contact our office today on (07) 3036 0649 or email tracey@robinsonnielsen.com.au.

This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this update to specific issues or transactions. For more information or specific advice on your circumstances please contact tracey@robinsonnielsen.com.au.