How does a restraint of trade work?
How does a restraint of trade work?
A Restraint of Trade is a clause in a contract of employment that states that in the event of termination of employment, the Employee is restricted in the work he can perform in that he will be restrained from performing similar work in competition with his/her former Employer, for a prescribed period of time and in a …
What does restraint of trade mean in employment agreement?
Restraint of trade. Restraint of trade clauses prevent employees from working in similar businesses in a way that may affect their former employer’s business. An employer and employee may agree to include a restraint of trade clause in their employment agreement.
Can a restraint of trade clause be unconstitutional?
It has, however, been held that restraint of trade clauses in contracts of employment are not unconstitutional. In order to pass constitutional muster, a restraint of trade clause in an employment contract must comply with the common law rules governing restraint of trade.
Can a restraint of trade agreement be void?
Generally, it is said that all agreements to a restraint of trade are presumed to be unenforceable, unless the restraint is shown to be reasonable. This means that even though you may have voluntarily accepted post-employment restrictions in your contract, the starting position is that these will be void and have no effect.
Can a cascading clause be used in a restraint of trade agreement?
If the restraint covers a large geographical area, the court is unlikely to hold it to be reasonable. Quite often, employers now try and incorporate a cascading clause in their agreement to avoid duration and geographical issues.
What is a restraint of trade in an employment contract?
| Employment Law Update. An employment contract will often include a restraint of trade clause to protect the employer’s interests after an employee leaves their business. These clauses are most commonly found in the contracts of senior and professional employees, and also in business sale agreements.
What can employer do if employee breaches restraint of trade?
If an employee breaches a restraint of trade clause or misuses confidential information, the employer may be able to apply to the Employment Relations Authority for an injunction restraining the employee from continuing such activities.
What does restraint of trade do in New Zealand?
Restraint of trade » Employment New Zealand Restraint of trade clauses prevent employees from working in similar businesses in a way that may affect their former employer’s business. Skip to main contentSkip to searchSkip to searchSkip to primary navigationSkip to primary navigationSkip to secondary navigation Search Starting employment
It has, however, been held that restraint of trade clauses in contracts of employment are not unconstitutional. In order to pass constitutional muster, a restraint of trade clause in an employment contract must comply with the common law rules governing restraint of trade.