Workplace & Employment

Restraint of trade clauses in your employment contract

Many employers, in an effort to protect their business, have restraint of trade/restrictive covenants in their employment agreements with their employees ("restraint clauses").  The general rule with restraint clauses is that they are presumed to be void for reasons of public policy unless they are reasonably necessary to protect the legitimate business interest of the party seeking to rely on that clause.

A restraint clause will generally only be considered reasonable if:

1. The employer has a legitimate interest requiring protection;

2. The restriction is:

(a) Limited to the employer's interest;

(b) For a period no longer than necessary for the protection of that interest; and

(c) Limited to a geographical area no larger than necessary for the protection of the relevant interest.

GLR Law is able to assist any business owner who has concerns regarding whether their restraint clauses are reasonable by:

1. Reviewing their employment agreements; and

2. Redrafting the restraint clauses if necessary.