Restraints of trade in Australia

The fundamental principle which applies to restraints of trade in employment is that such a clause in an employment contract is prima facie presumed by the common law to be void as against public policy unless the employer can prove a legitimate business interest deserving of special protection. In Wallis Nominees (Computing) Pty Ltd v Matthew William Pickett [2012] VSC 82 the Supreme Court of Victoria held that an employer could not enforce a restraint of trade clause against a former employee because it was invalid and unreasonable because:

(a) Mr Pickett was not considered by the judge to be at risk of exploiting the customer connections of his former employer because he was not the “human face” of that business and did not have the relevant control over the business of the client to enable such exploitation. Indeed the skills and experience he had gained while working for the former employer did not constitute a legitimate business interest which the company could protect by the restraint; and

(b) the length of the restraint clause (12 months) was too long because it exceeded the notional time the company needed to find an effective replacement for the former employee and consequently the clause was unreasonable.

 

Wallis Nominees (Computing) Pty Ltd v Matthew William Pickett [2012] VSC 82