The terms of the restraint may be contained in a written employment contract or they may be set out in a separate document. They must be consistent with public policy otherwise they are prima facie void.

Additionally, not all post-employment restraints are enforceable unless an employer can prove that the restraint is reasonable, judged at the time when the restraint was agreed.

What is reasonable will depend on a number of factors, including the market concentration of the arrangement i.e. how many competitors there are against a business that seeks to restrain the ex-employee. An employer cannot normally impose a post-employment restraint merely to protect itself from competition from an ex-employee, or to prevent a valuable worker from other employment.

When an issue regarding a restraint of trade is brought before the courts, considerable weight will be given to what the parties (the employer and employee) have negotiated and embodied in their contract. A contractual consensus is however not definitive. If the terms of a restraint is ambiguous, a court will usually prefer an interpretation which narrows its operation.

Under the common law doctrine for a restraint of trade to be enforceable an employer must be able to prove two elements:
● That they have legitimate and protectable interest in imposing the restraint; and
● The scope of the restraint must be no wider than is reasonably necessary to protect that interest. Three factors associated with scope are: the duration of the restraint, the area which it is to have effect, and the nature of the activities that it seeks to control.
Some examples of when a post-employment restraint is valid:
● If an employee has access to confidential information that goes beyond mere ‘know-how’ (ie trade secrets) and they may be in a position to use that knowledge to their employer’s detriment
● If an employee’s work involves personal contact with their employer’s customers, and the employee is able to use that connection to entice those customers away from the employer.

If you have concerns about a restraint of trade please get in touch with us – your first phone call will always be free.