WA Contractor with Restraint of Trade - Opinions?

[Steele John George]

My daughter worked as a Contractor for a Company in the Fitness Industry. In September, she and another contractor had an idea to start their own part time business for fitness in early mornings/ late evenings outside the workplace.

They have a clause:

Exclusivity - The parties agreed that the Company has no exclusive rights to the services of the contractor. The Contractor shall be at liberty to perform the services of a similar nature or otherwise for persons or companies other than the company as Contractor, in its absolute discretion, thinks fit.

They informed the Company of what they were doing, the owner had no objections and thanked them for being professional and letting him know. At the end of September when the owner saw they had had got this going, he talked my daughters partner out of the business by offering him a managers position and then basically told my daughter if she didn't include him in her business he would phase her time out of his business and she would have no work. In addition in September a Member of his Gym saw her facebook page and approached my daughter when the classes would be, she did not approach any members at any time. He never attended a session, but my daughter is now being accused of stealing him in September. It never happened it was an open question on facebook that the owner never complained about till now.

She resigned, went away for 2 weeks and came back and continued her Fitness business she started. Now she has received a letter from him seeking restraint of Trade. Yes, she signed a contract with that clause in it, however, I think it's unreasonable it asks for 12 months, then 6 then 4 and a 10 km radius after he already agreed for her to do this business while she was working for him. I see two problems...he coerced her to resign or be phased out of her job and he already agreed to her doing this business before she left and the contract to me seems contradictory.

Any comments or opinions are appreciated

 

[Rod]

Sorry, I'm confused by your post.

Is there 1 or 2 contracts?

To some extent it sounds a bit like 2 business people arguing over terms of contracts and is not an employment law issue.

Without reading the contract/s hard to know what is happening.

 

[Steele John George]

Sorry, I'm confused by your post.

Is there 1 or 2 contracts?

To some extent it sounds a bit like 2 business people arguing over terms of contracts and is not an employment law issue.

Without reading the contract/s hard to know what is happening.

Rod, Thanks for replying. It's only one contract. How can you have an Exclusive clause and a restraint on trade in the same contract? I believe this guy is using contractor contracts to get out of employing and paying social security. I suspect it's a sham contract. He has employed my daughter as a contractor.

 

[Steele John George]

I just reread what I first posted and yes a bit of a dog's breakfast. I've gone back got my facts straight and re-posted, hopefully, this makes more sens

My daughter worked as a Contractor for a Company "F" in the Fitness Industry. Late August she and another contractor had an idea to start their own part-time business for fitness in early mornings/ late evenings outside the workplace. They have a clause in their Contract with Company "F" which states:

Exclusivity - The parties agreed that the Company has no exclusive rights to the services of the contractor. The Contractor shall be at liberty to perform the services of a similar nature or otherwise for persons or companies other than the company as Contractor, in its absolute discretion, thinks fit.

As a courtesy and on my advice, they informed the Company 'F" of the proposed development of their own business at the beginning of September. The owner of the Company "F" had no objections and thanked them for being professional and letting him know. The location to start was 7.5 km away from the workplace. By mid-September, the Owner approached the other contractor and offered him a managers position if he didn't proceed setting up Business with my Daughter.

Other Contractors agreed. The Owner of Company "F" then pulled my daughter aside and told her he wasn't threatening her but that she had 3 options, 1. She makes him a silent partner in the business, 2 She put her business under His Company "F" and work for him or 3. She joins his Company "F" and grows his business, otherwise, she would be phased out of work, ie her hours would be reduced till she had no work. My daughter refused and proceeded to set up her business legally with a name she had chosen (B.FIT Perth).

She also informed us that she had no future at her current employment as the owner had threatened to take away her hours, so she would resign. She then gave 2 weeks notice as per contract and resigned on October 1, 2019, and went away for a Honeymoon. She did not receive her pay on time on October 15 and considered her contract void. The payment did come days later as it had many times over the 8 month period she worked as a Fitness Instructor.

After returning to Aust. late October, She started promoting her first exercise session on Facebook and Instagram and begin October 28th at 630 am. The location was outside her apartment some 700 m from her old workplace. She had been forced to locate next to her apartment since the other contractor decided not to proceed with her in the business as she had no Drivers license. She has Local council approval.

Today she received an emailed Letter from the Owner claiming she is in breach of her contract for Restraint of Trade with claims that she solicited his customers (This hasn't happened and can easily be proved, none of his clients was present). The contract she signed in February this year has a clause with a Restraint of Trade in it.

I think she has been taken advantage of at the time of signing and the clause is unreasonable. I also feel she has grounds for bullying/harassment whatever you call it for treating her the way he did and getting her to resign because he couldn't get a share of her business. In the contract, she signed it gives her Exclusivity(As mentioned above ) but at the same has a clause to restrict her Trade - what is that?

I suspect the Owner has employed my daughter as a contractor to get out of paying benefits and the Contract is a Sham.

 

[Steele John George]

Rod, Thanks for replying . Its only one contract. How can you have an Exclusive clause and a restraint on Trade in same contract? I believe this guy is using Contractor contracts to get out of employing and paying social security. I suspect Sham contract. He has employed my daughter as a contractor.

Rod, I reposted and I hope its clearer now.
rgds

 

[Rod]

Thank you,

One contract, with 2 clauses seemingly contradicting each other.

Cannot see a void contract here. Maybe at best voidable based on non-payment at one point in time, but that defect was cured or voidable due to uncertainty (2 mutually contradicting clauses).

There may also be sham contracting but that is unrelated to the restraint clause.

You daughter has 3 options:
1. Ignore letter
2. Respond to letter
3. Stop her new business

If it was me I'd choose option 2 pointing out:

• I'm not in competition. Not running a gym.
• I rely on my exclusivity clause. This clause was an operative reason for me agreeing to enter into the contract.
• I was threatened with having my hours taken away (giving additional details such as who, when, where).
• You have adversely affected my business hiring my business partner.

Then in a polite way say 'suck it it up buttercup'

It is likely some people believe option 1 is a good option as it gives the other party nothing to grab onto.

However your daughter may benefit from legal advice, not just an opinion.

 

[Steele John George]

Rod,
Your opinion is much appreciated. We have given this fellow an opportunity to back away, so now we will seek advice and proceed from there.
Thanks and regards