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ARTICLE · 08 NOVEMBER 2017

What does a reasonable employment restraint look like?

Failure to properly draft an employment restraint of trade clause can render the clause void and unenforceable.

AustraliaEmployment and HR

There's no "cut-off" for restraint clauses, but very few employers seek to restrain post-employment activity for more than 12 months. That's because, at common law, restraints are contrary to public policy; that a person may freely carry on their trade. Restraints may involve non-competition or non-solicitation. To be enforceable, restraint of trade clauses must be reasonable. A court will test reasonableness by considering if the clause protects the legitimate business interests of the enforcer and if it is in the public interest. It will also take into account all of the circumstances and balance the employer's business needs with the burden on the employee.

Generally, non-solicitation clauses are easier to enforce than non-compete clauses. While there is no hard and fast rule, a reasonable restraint period (for non-solicitation) is often considered to be between three and 12 months after termination, subject to industry-specific and individual considerations.

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