Posted on: Mar 26, 2012
There has been a long-standing presumption that restraints of trade (RoT) are often unlawful and unenforceable. It is no longer safe to assume they are “not worth the paper they are written on”.
Keep in mind that while they may look unreasonable and therefore unenforceable, the Courts can modify the conditions and order compliance.
As a guideline:
• Time period – 3 months is becoming standard.
• Non-solicitation clauses more readily upheld than non-compete clauses.
• Geographical coverage will be considered on a case-by-case basis, but the more limited the area the more likely to be upheld.
• Consideration is required for RoT to be enforceable – but remuneration under the IEA is sufficient if agreed at the commencement of employment. Separate consideration is required to add a ROT to an existing IEA.
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.