What are restraint provisions in employment contracts and why are they important?
Posted on June 22, 2023
Restraint of trade provisions are included in employment contracts to protect an employer’s legitimate business interests, such as trade secrets, confidential information, customer and staff connections by restricting an employee’s activities after they have left employment. Such clauses are particularly important for more senior employees who regularly deal with customers of the employer or confidential information.
Restraint of trade clauses will be enforceable if the employer can demonstrate the restraint clause is reasonable. In assessing reasonableness, the Courts will look at the scope of the restriction, the period of time attached to it, and the geographical area in which it is to operate.
Employment contracts and restraint of trade clauses must be carefully drafted to ensure they can be enforced as their wording will be scrutinised carefully by a court.
