Help new employees get off to a great start with our free New Employee Onboarding Checklist.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n A restraint of trade clause<\/a> can limit your employee’s ability to compete with your business after they leave. For example, say you run a tech business, and your employee has highly valuable knowledge about your business’ operations and client lists. If they leave your business, you would not want the employee sharing that confidential information<\/a> with a competitor in the tech industry. <\/p>\n\n\n\n In this sense, a restraint of trade clause must protect an employer\u2019s legitimate business interests.<\/p>\n<\/div>\n\n\n\n Some common restraint clauses may take the form of a:<\/p>\n\n\n\n While restraint clauses seem enticing, they are difficult to enforce. Employers can pursue any breaches of a restraint of trade clause with the Employment Relations Authority<\/a> (\u2018ERA\u2019) or the Employment Court (\u2018the Court\u2019). However, the ERA or the Court are only likely to enforce the clause if it is both:<\/p>\n\n\n\n When making its assessment, the ERA or Court will look at the following factors. <\/p>\n\n\n\nWhat is a Restraint of Trade?<\/h2>\n\n\n\n
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How Can Employers Enforce a Restraint of Trade Clause?<\/h2>\n\n\n\n
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Factors<\/strong><\/td> Explanation<\/strong><\/td><\/tr> Protecting a Legitimate Business Interest<\/td> A legitimate business interest would likely be if the restraint protects certain trade information or customer connections where the relationship is valuable or confidential.<\/td><\/tr> Interests<\/td> The ERA and the Courts will generally look at whether the clause fairly weighs the interests of both parties. This means the ERA or the Court will look at the employer’s business interests compared to the employee\u2019s right to earn a living and pursue a career without restriction.<\/td><\/tr> Reasonableness<\/td> Any restraints must be reasonable regarding the length of time, the scope and geographical area. If a restraint is excessively broad, the clause will likely be unenforceable.<\/td><\/tr> Public Interest<\/td> If the restraint relates to a public interest, such as preventing competition or restricting any public interest innovation, the restraint may be unenforceable.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n
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