“Are these restraints ever worth it, anyway?”
Yes.
This is the first successful case I’ve seen for a little while, but what a significant statement in support of employers, this is. Particularly given the recent comments from previous Fair Work Commission President, Justice Iain Ross, when he declared that employers should have to pay ex-employees for the duration of their restraint period.
This perspective is likely to be one of the next political footballs thrown at our faces by Unions, with Justice Ross’ remarks and the United States’ decision to remove post termination restraints surely spurring on the discussion.
But here we have a case where reasonableness has won. An organisation that stands a genuine possibility to lose market share on a national level, for no other reason than an employee deciding to take a new job.
This organisation has other employees that may be impacted by such market share loss (risk). It is in the national public interest to uphold these restraints in matters such as these.
The court addressed Samsung’s request to enforce a restraint of trade clause against Mr. Grenville, an ex-employee. Mr. Grenville intended to start working for Electrolux Home Products Pty Ltd, a direct competitor, shortly after his resignation from Samsung.
Samsung then sought an interlocutory injunction to prevent this move, citing the post-employment restraint in Grenville’s contract.
Key Points of the Judgement:
This judgement highlights the importance of having clear and reasonable restraint of trade clauses in employment contracts to protect business interests such as confidential information and customer relationships.
Employers in Australia must ensure these clauses are well-drafted and reasonable in scope and duration to be enforceable, providing a legal basis to prevent former employees from potentially harming the business when joining competitors.
When our clients ask, “are these clauses even worth it?”… we always err on the side of caution, and particularly around those positions with privileged, direct and regular access to customers, customer databases, pricing structures, secret processes and innovations, and especially those who drive revenue through the door.