ARTICLE · 31 OCTOBER 2008

Enforcement Of Non-Competition Obligations

Norton Rose Fulbright Australia

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On 21 August 2008, the Supreme Court of New South Wales handed down a decision in Tullett Prebon (Australia) Pty Limited v Simon Purcell [2008] NSW SC852, which addressed the enforcement of non-competition obligations during the term of an employment contract, in circumstances where the employee was on "garden leave."

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On 21 August 2008, the Supreme Court of New South Wales handed down a decision in Tullett Prebon (Australia) Pty Limited v Simon Purcell [2008] NSW SC852, which addressed the enforcement of non-competition obligations during the term of an employment contract, in circumstances where the employee was on "garden leave".

Practical significance

The case is significant because, even though the employment contract was still on foot, the Court approached the question of whether the employee should be restrained from working for a competing business in the same (quite strict) way as if the employer was trying to enforce a post-employment restraint of trade. The Court took this view by drawing a distinction between the contract of employment (which in this case had not been terminated) and the "relationship" of employment, which had come to an end as soon as the employee stopped working. The fact that the employee was on garden leave did not alter the situation.

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