How Can I Determine Which Restraint Period Applies in My Employment Contract in Australia?

Question from Este, How Can I Determine Which Restraint Period Applies in My Employment Contract in Australia?

Answer from AI:

Understanding the terms of your employment contract, especially when it comes to restraint periods, is crucial. In Australia, restraint of trade clauses are often included in employment contracts to protect the employer’s legitimate business interests after an employee leaves the company. These clauses can restrict an ex-employee’s ability to work for a competitor, start a similar business, or solicit clients or employees from the former employer for a certain period.

Interpreting Restraint Clauses

The interpretation of restraint clauses can be complex and often depends on the specific wording of the contract and the circumstances surrounding the employment. If your contract references two different restraint periods, it’s important to understand the context in which each is mentioned.

• Is one period mentioned as a default and the other under certain conditions?
• Does the contract specify different activities or behaviors that each period applies to?
• Is there a cascading or ‘ladder’ clause that provides for different periods, geographical areas, or activities, and allows a court to choose the most reasonable combination?

Legal Principles

In Australia, the general principle is that restraint of trade clauses are void unless they are reasonable to protect the legitimate interests of the employer. The reasonableness is assessed at the time the contract is entered into, not when employment ends.

The courts will consider factors such as the nature of the work, the employee’s role, the duration and geographical scope of the restraint, and whether the employee received any compensation for the restraint.

Seeking Legal Advice

If you’re unsure about the interpretation of your contract, it’s advisable to seek legal advice. An employment lawyer can review your contract, consider the specific circumstances, and provide guidance on how a court might interpret the restraint clauses.

Remember, this information is a general guide and not a substitute for legal advice. You should consult with a legal professional for advice tailored to your situation.

For more information on restraint of trade clauses, you can refer to the Fair Work Ombudsman or the Law Handbook.