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Restraint of Trade – To have or not to have.

Posted on May 20th, 2013

Do you have concerns that a departing employee will go to your competitor?

Things to think about. In seeking to implement a restraint of trade clause which is enforceable, an employer first needs to consider what the proprietary interest is that it is seeking to protect and then four key elements;

a) What activities the restraint seeks to restrict,

b) The geographical area of the restraint,

c) Its duration,

d) The consideration (because you are effectively ‘buying’ the restraint). The facts of the particular situation need to be considered carefully alongside the reasonableness of the restraint rather than the employee having to show it is unreasonable. It is clear that where there is a legitimate proprietary interest to protect, and a consideration has been identified, the Court is prepared to enforce a significant restraint of trade. In a lot of cases a good ‘non-solicitation of clients’ clause can back-up or remove the need for a restraint of trade.

If you need advice or assistance with the enforcement of a restraint of trade, want to consider negotiating such a restraint or revise an employment agreement to include a restraint or non-solicitation clause, please contact Doug.

Filed under Employment Agreements |