ARTICLE · 31 JANUARY 2013

Former HR director restrained effectively - but be careful

Brown Wright Stein Lawyers

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This case illustrates the point that restraint provisions in employment contracts are tricky to draft and to enforce.

AustraliaEmployment and HR

By Robin King and Peter Wright

On 1 March 2012, the Federal Court found that a contractual clause restraining a HR director from competing or working in any way in the business of HR outsourcing in Australia and HR recruitment in Australia and New Zealand for two years after his termination of his employment contract was reasonable. In HRX Holdings Pty Ltd v Pearson [2012] FCA 161, Justice Buchanan ordered an injunction on the basis that he was not satisfied that Mr Pearson was prepared to honour the restraints if an injunction was not granted.

Although the restraint clause contained in Mr Pearson's contract was particularly broad in both restraint area and time frame, the Court held that it was reasonable due to a number of factors including:

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