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Excerpt from this article first published in Human Resources Magazine, Issue 153 - 28 May 2008
The Supreme Court of Victoria recently held that a purported post employment restraint was unreasonable, and in doing so, offered some guidance on what an enforceable restraint may involve.
The restraint agreement attempted to restrain an employee of Roberts Research, Mr Pyra, for the 12 month period following termination of employment. The restraint extended to engaging in, being involved with, or being associated with, a business competing with the business of any customer. ‘Customer’ included any customer with whom Mr Pyra had contact in the course of the employment with Roberts Research, or a customer who had disclosed confidential information to him.
The Court held that the restraint was unreasonable. That decision was based upon the restraint preventing Mr Pyra from being involved with any business competing with a customer of Roberts Research merely because he had had contact with such a customer. The contact might have been fleeting or of no consequence.
The Court also held that there was no relevant confidential information disclosed to Mr Pyra. Roberts Research should have identified with sufficient specificity the nature of the confidential information allegedly disclosed to him.
Mere contact between a customer and an employee is unlikely to amount to a legitimate business interest sufficient to warrant a post employment restraint.
To prevent an employee from using confidential company information post employment, employers should specify in the contract of employment the type of information which is confidential.
Sharlene Wellard Senior Associate |
Michael Whitbread Lawyer |
