NSW Restrictive covenant on employment contract - can it be enforced?

[Darren Taylor]

Good morning to all,

I am currently in the process of finding alternative employment due to the toxic culture of the business where I currently work as a full time employee. I am at a senior manager level and the stress of the culture and the way I am being treated is causing me considerable anxiety and depression. I want to leave to escape the situation and move on with my career. I have been made a verbal offer from a direct competitor who works in the same field and with some of the same clients.

When I joined my contract had a Restrictive Covenant attached, as follows:

Restrictive Covenant
In consideration of the remuneration to be paid to you under this Agreement, you undertake that you will not perform any work in any capacity (including as a Principal, contractor. agent or employee) directly or indirectly with any client of the Company for whom you have carried out work or have had personal contact with whilst in the Company’s employment within the period of six (6) months after the conclusion of your employment with the Company.

You agree that:
. This restraint is reasonable in terms of its extent, duration and reason;
. This restraint goes no further than necessary to protect the interest of the Company; and
. The restraint does not unreasonably restrict your right to carry on your profession or trade.

The obligations in this clause survive termination of the Agreement

My questions are as follows:

Can they enforce this?

Is there already a precedence set by the fact that a lot of people who have previously quit the company I work have joined the aforementioned direct competitor and as far as I am aware they have not been restricted?

Also, the fact the direct competitor has the same clients surely precludes my current employer from trying to enforce it anyway?

Your advice would be most welcomed.


Thanks
DT

 

[Clancy]

It is a normal requirement that you do not disclose confidential information.

However, beyond that, I doubt they have the authority to prevent you carrying out the duties required by your new employer with clients your new employer is already in contact with. So that is why they have included this clause; ". The restraint does not unreasonably restrict your right to carry on your profession or trade."

 

[Darren Taylor]

Hi Clancy,

Thank you very much for responding, it is most appreciated.

I would never share or disclose confidential information between companies, that would ruin my reputation. I feel more comfortable now that they probably cant enforce this.

Thanks again for the advice.

Regards
Darren

 

[Clancy]

Hi Clancy,

Thank you very much for responding, it is most appreciated.

I would never share or disclose confidential information between companies, that would ruin my reputation. I feel more comfortable now that they probably cant enforce this.

Thanks again for the advice.

Regards
Darren

Ok that's good.... but if reputation is important too you, then sometimes you might have to go the extra mile (within reason) with regard to 'perception' rather than strictly what is fact.

 

[Serge Gorval]

it seems that you are/were of relatively senior status, depending obviously on the termination/severance/ notice payments, it may not be unreasonable to enforce this. i'm not sure if this is the full clause or there is what is known as a cascading restraint, which is permitted in NSW> e.g. 12 months --> then 6 months --> then 3 months etc..

provided that you do not breach any confidentiality obligations, a 6 month period albeit arguable, is probably unreasonable.