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Negotiating employee restraints

Employment restraints are a common inclusion in Employment Agreements. We regularly have employers saying “I just restrained everything, isn’t that enforceable?” or employees saying “I just signed the contract to get the job, I didn’t really think about what I would do later.”

The best time to enter a restraint agreement is at the commencement of the employment arrangement. Any restraint should be reviewed whenever the employee’s position or job description is varied. Whether a restraint is binding and enforceable is based on what the Courts consider reasonable at the time they were entered. Because of this, it is vital that restraints are reviewed, especially if an employee is given higher level of responsibility, knowledge, or client contact during their employment.

The first time to carefully look at the restraint provisions should not be at the end of the employment relationship. The restraint should be clearly understood and agreed by both parties at the beginning.

Employers often realise that they have not placed sufficient or binding restraints on their employees and or contractors when they lose an employee or contractor. It is then that they discover the cost and loss of business that could have been avoided.

On the other side of the coin, we regularly see employees who do not take the time to review the restraints in their agreements before signing them. They bind themselves to onerous restraints without knowing with the only options being to live with the restraint or mount a legal battle. Employees should assume when they sign employment agreements that the restraints contained in them will be enforced and consider the consequences carefully. Negotiations should be entered at that time of employment for clear understanding. Interpretation should not be left to chance.

For further information contact our Workplace Law Team.