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NSW Restraint of Trade Clause in Employment Contract?

Discussion in 'Employment Law Forum' started by swamprat96, 8 June 2016.

  1. swamprat96

    swamprat96 Member

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    I have a possible scenario where Recruitment Company A is taking over a "service" that Recruitment Company B had - and unsuccessfully tendered for the renewal. The service has a resource which is myself and Recruitment Company A wants to assume the resource. Problem is Recruitment Company B has a clause in my employment contract which basically says I can't do this for a period of 6 Months.

    Is this Restraint of Trade? Their argument is that they spent money to find and insert me into the position. Now that they have lost the contract they are basically putting me out of work. The client wants to retain me as I have the knowledge and skillset they want. Thoughts?

    The clause is

    "To the extent permitted by law the Contractor and relevant Nominated Person will not at any time during the currency of a Schedule or for a period of 6 months after its termination (either on its own account or for any other person) solicit (accept any approach or initiate any contact) work from company B's Client. "
     
  2. Sophea

    Sophea Well-Known Member

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    Yes this is a restraint of trade, of sorts. You could technically say that since they lost the contract the company is no longer their "client", however the upshot is, yes they are putting you out of work. Unless you can get their consent or get the new recruiter to purchase you from them, you will be contravening your restraint of trade if you go ahead and continue to work there.
     
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  3. Rod

    Rod Well-Known Member

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    The other possible 'out' on these facts is that swamprat96 is not soliciting for the work nor is he accepting an approach from Company's B client - he is accepting work at a recruiting company.

    Unless Company B has other work they can offer you or they paid you higher than normal wages for the work you do, you have a reasonable chance of a court allowing you to do the work. One criteria the court uses is whether you will be unemployed due to the restraint clause. A court will not allow a restraint clause to stop someone working who would otherwise be unemployed.
     
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  4. Sophea

    Sophea Well-Known Member

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    Check the definition of "Nominated Person" in the agreement, it sometimes refers to an agent and it could still be argued that swamprat96 is still accepting work from Company B's client, albeit through an agent.
     
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  5. Tim W

    Tim W Lawyer
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    Depends. Is the new company a labour hire firm (in which case you will become their employee), or
    are they an agency, in which case, you remain self employed?

    Why doesn't the company to whom you are providing your services just employee itself?
     
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  6. Matthew Lynch

    Matthew Lynch Lawyer
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    It is critical to know whether you did anything to prompt Recruitment Company A terminating their contract with Recruitment Company B. Such as a conversation between you and A where you said "Why don't you get rid of Recruitment Co B and you can have me at half the price".

    That will assist in determining whether you have solicited the position/contract with Recruitment Company A and therefore breached the term of your contract with B.

    Feel free to call me to discuss more strategic advice.
     
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