Post-employment restraints: Can they be enforced?

While post-employment restraints are a common feature in many employment contracts, they are often unenforceable, an expert has said.

BY Cameron Edmond 05 Sep 2013

Post-employment restraints are most common in regards to senior roles, and are generally established by organisations to prevent the uprising of new competition, poaching by current competitors, and the leaking of IP and other sensitive information.

However, if these restraints are found to be unreasonable (contrary to public policy), they are rendered null and void, and therefore unenforceable, Nicole Dunn, senior associate for Carroll & O’Dea, said in an article for Mondaq.

“A post-employment restraint cannot be imposed to merely protect the employer from competition from an ex-employee or to prevent a valuable employee from being employed elsewhere,” Dunn explained.

The onus of proof lies with the employer to demonstrate the restraint was reasonable when agreed to. An employer must establish it had legitimate interests in imposing the restraint, and that it only covered what areas were necessary.

Key HR takeaways

Post-employment restraints must go through rigorous drafting phases to ensure they are air-tight. For the restraint to be enforceable, HR must ensure that:

The employee had access to confidential information beyond “know how”, and the employee could potentially use that information in a way damaging to the employer.
The employee’s work involved contact with the employer’s customers or clients, and these connections could be used to entice them away from the employer.