NSW Employment Contract Restriction

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johnpage

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23 March 2020
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Hi,
In my contract, there is a clause which says, "On termination of your employment it is requirement that you shall not work within the car hire industry, in direct competition with (my company name) either on or within 100kms of Sydney CBD, for a minimum of 1 year."
Is there a way that I can start a car hire business in Sydney without waiting for a year? Please suggest.
 

Tim W

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Are you a PAYG employee?
 

Tim W

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As a general thing, the aim of clauses of this type is to prevent somebody from
selling a going concern business, "cashing in", and then setting up anew, "just down the road",
in unfair competition with the business they just sold.

If the effect of a restraint clause is to limit (otherwise fair market) competition, or
to unfairly protect a monopoly (or a dominant market position), in a small or closed market (eg the only Chiro in the village), or
to limit your right to work in your chosen field, or,
to advance your career, or, to simply change employers, or is in some other way unreasonable,
then you may find that the court would hold the restraint of trade clause to be inoperative.

It is uncommon for a court to uphold such a clause for a PAYG employee.
The greater hazard you face is your former employer "putting it about" in the market that you were sacked,
rather than the truth that you resigned.
 
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johnpage

Active Member
23 March 2020
7
0
31
As a general thing, the aim of clauses of this type is to prevent somebody from
selling a going concern business, "cashing in", and then setting up anew, "just down the road",
in unfair competition with the business they just sold.

If the effect of a restraint clause is to limit (otherwise fair market) competition, or
to unfairly protect a monopoly (or a dominant market position), in a small or closed market (eg the only Chiro in the village), or
to limit your right to work in your chosen field, or,
to advance your career, or, to simply change employers, or is in some other way unreasonable,
then you may find that the court would hold the restraint of trade clause to be inoperative.

It is uncommon for a court to uphold such a clause for a PAYG employee.
The greater hazard you face is your former employer "putting it about" in the market that you were sacked,
rather than the truth that you resigned.
Thanks Tim. Is it a "conflict of interest" if the business is registered under my family member's name where I work behind the stage for a year without pay?
 

Tim W

Lawyer
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That sounds like something somebody has said to you.
What do you mean by it?
 

johnpage

Active Member
23 March 2020
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That sounds like something somebody has said to you.
What do you mean by it?
You are right. One of my friend (not a lawyer) mentioned about the term "conflict of interest". He said, "If someone close to my family starts the same business (car hire) then it could be conflict of interest". It didn't make sense to me though.
 

Tim W

Lawyer
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28 April 2014
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If you are an employee, and/or a director of one business,
and you set up a competing business while still a "participant" in the first one,
then, yeah, that's a potential problem.

But if you leave, free and clear, so to speak, and set up on your own... much less problem.
 

johnpage

Active Member
23 March 2020
7
0
31
If you are an employee, and/or a director of one business,
and you set up a competing business while still a "participant" in the first one,
then, yeah, that's a potential problem.

But if you leave, free and clear, so to speak, and set up on your own... much less problem.
Thanks Tim