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In the recent Supreme Court decision of Marlov Pty Ltd v Murat Col [2009] NSWSC 501, an employer’s attempt to enforce post-employment restraints has been unsuccessful.
Marlov Pty Ltd (Marlov), which operated as a real estate agent, sought to enforce post-employment restraints against its former employee (Murat Col), who had commenced employment with a competitor. Mr Col was engaged in the sale of property with both employers.
Marlov asserted that Mr Col breached his post-employment restraints by engaging in or being involved in a competing business with Marlov, as well as soliciting clients and customers of Marlov.
With respect to the allegations of solicitation of Marlov’s customers and clients, the Court held in favour of Mr Col, finding that he did not contact or approach former clients of Marlov. Rather, it was Mr Col who was approached by Marlov’s former clients.
In addition, the Court took a very dim view on covenants that purported to restrict mere competition. The nature of the real estate profession, and the absence of “any special relationship with a client or clients” of Marlov, were important factors which the Court took into consideration in deciding that the restraint on mere competition was invalid.
HR Tips
The Court’s decision recognises the continuing need to restrain certain employees, whilst at the same time identifying the difficulties with enforcing such restraints. This case shows that when drafting post-employment restraints, and particularly “non-compete” clauses, employers should be aware of the difficulties of enforcement, including the need to closely tailor restraints to each employee, rather than use a broad-brush approach.
Ben Motro,
Lawyer
Australian Business Lawyers
NOTE: This is for information purposes only.
It does not purport to be comprehensive or to render legal advice.
