Introduction to post-employment restraints

This Guidance Note summarises key legal issues regard post-employment restraints in an employment contract. It should also be read alongside these Guidance Notes: Enforceability of post-employment restraints, Drafting post-employment restraint clauses and What is a repudiatory breach of the employment contract?

Authored by Luana Payne, Lawyer, Senior Associate, and Alannah Hogan, Lawyer, Corrs Chambers Westgarth. Updated by the LexisNexis Legal Writer team.

This Guidance Note summarises key legal issues regard post-employment restraints in an employment contract.

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

For guidance on negotiating restraints see “Post-termination obligations/restrictions (restraints of trade)” in Guidance Note: Issues to consider when advising on an employment contract.

For guidance on dealing with contraventions of restraints see Subtopic — Acting on employee breaches of restraints of trade and confidentiality obligations.

What are post-employment restraints?

Post-employment restraints are express contractual provisions that attempt to restrict an employee from competing with the employer after the termination of their employment. The operation of a post-employment restraint is usually framed by a reference to:

• a geographical area (eg Sydney or a 20 km radius of the employer’s business);
• a period of time (eg 6 months post-employment);
• defined industries, businesses or activities that the employee cannot be involved in; and
• former customers/clients or employees who the employee cannot contact or solicit.

The purpose of post-employment restraints are to protect legitimate business interests of the employer.