Restraint Of Trade - Recent Decisions

Article by Jessica Paten, Trainee Solicitor

Employers are increasingly prepared to seek to enforce restraint of trade clauses against former employees in today's competitive labour market. This is demonstrated in three recent decisions of the New South Wales and Western Australian Supreme Courts. These cases indicate that while the Courts will not enforce unnecessarily broad or uncertain restraints, employees who ignore reasonable restraints or operate under a ‘cloak of deception’ will receive little mercy.

Woolworths v Banks

Woolworths attempted to restrain Mr Banks, a former executive employee, from accepting employment at Myer for a six month period after leaving Woolworths. It relied on a clause in Mr Banks' employment contract that prevented his employment by a ‘competitive business’ for a period of up to 12 months after his employment with Woolworths ended.