- Employee Wins Post-Employment Restraints Case
- October 1, 2013 | Author: Adam Salter
- Law Firm: Jones Day - Sydney, New South Wales Office
An employer has failed to prevent a former employee from working for a rival company. Although the employee's new role was materially different, the employer unsuccessfully brought an injunction before the Supreme Court of New South Wales seeking to enforce certain post-employment restraints in the employment contract. The nature of the new position played a significant role in determining the outcome of the case.
The employee successfully argued that he would be working on the procurement side of the business rather than the customer sales side of his original position. Further, his new role with the rival company began in New Zealand rather than Sydney, so the businesses were not in direct competition.
This enabled the employee to see out his restraint period of six months with the employer without there being a risk of breaching his contractual obligations. In addition, the new employer had included a contractual clause protecting the continuing interests of the original employer. The Court recognized that both the employee and the rival company were "acutely conscious" of the restraints of the employment contract and sought to avoid an actual or threatened breach.
The Court rejected the employer's claim for relief and found that the employee had a "sound moral compass" and was genuinely concerned about complying with his contractual obligations. The Court found the likelihood of harm to the original employer was "remote and tangential" in deciding to dismiss the employer's application, awarding costs in favour of the employee.
Lesson for Employers
Careful consideration needs to be given about the prospects of enforcing a restraint as it can be a costly exercise if unsuccessful. In particular, employers should review the appropriateness of post-employment restraints and seek legal advice when preparing employment contracts to ensure the restraint is enforceable.
Allied Mills Pty Limited v Miners (2013) NSWSC 1117