Drafting post-employment restraint clauses

A carefully-drafted post-employment restraint can help an employer prevent former employees from engaging in activities which could undermine the employer’s legitimate business interests following the termination of their employment. The key to a valid post-employment restraint is to ensure that the restraint goes no further than is reasonably necessary to protect those interests. A restraint which unreasonably impairs competition or restricts a person’s ability to apply their skills to earn a livelihood is likely to be struck down. The following areas should be carefully considered when trying to draft strategic and enforceable post-employment restraint clauses.

Authored by the LexisNexis Legal Writer team.

This guidance note provides guidance on drafting post-employment restraint clauses.

A carefully-drafted post-employment restraint can help an employer prevent former employees from engaging in activities which could undermine the employer’s legitimate business interests following the termination of their employment. The key to a valid post-employment restraint is to ensure that the restraint goes no further than is reasonably necessary to protect those interests. A restraint which unreasonably impairs competition or restricts a person’s ability to apply their skills to earn a livelihood is likely to be struck down. The following areas should be carefully considered when trying to draft strategic and enforceable post-employment restraint clauses.

It should also be read alongside Guidance Notes: Introduction to post-employment restraints, Enforceability of post-employment restraints and What is a repudiatory breach of the employment contract?

What is the legitimate business interest being protected?

When seeking to enforce a restraint, an employer must convince the court that it has a legitimate business interest to protect. The courts have ruled the following business interests are capable of supporting a restraint:

• trade secrets;
• confidential information;
• customer/client connections; and
• a stable workforce.

See Herbert Morris Ltd v Saxelby and Lindner v Murdock's Garage.