Court upholds restraint of trade clause preventing employee working for competition...

The High Court has recently upheld a restraint of trade clause which prevented an employee from working in competition within a 15km radius of their former employer’s place of business. The Court found that the employee’s actions were a “clear breach of contract”.

The employee handed in his 20 working days’ notice to his former employer. Two days after his notice was complete, the employee began working for a company in direct competition with his former employer.

The employee’s contract with the former employer included a “restraint of trade” clause. The clause prevented the employee from working for the employer’s competition within a 15km radius, for three months after his employment ended.

The employer had reminded the employee that he could not work in competition for three months after leaving his employment.

After finding out that the employee was working for their direct competition, the former employer applied to the Court for an order preventing the employee from working for the company.

The Court found that the employee was in clear breach of his contract with the former employer and decided that the restraint of trade clause was “reasonably limited”. The Court decided that the employee had ignored the contract as well as warnings from his former employer regarding his work in competition.

The Court allowed the order preventing the employee from working in competition for three months after the completion of his notice period.

It is important to be aware of your contractual obligations as breaches of contract are taken very seriously by the courts. If you are confused about your obligations, it pays to seek advice from a professional with experience in the area.

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