Read be­tween lines of em­ploy­ment con­tracts

The Advertiser - Careers - - Executive, Professional & Management -

EM­PLOY­EES must check their con­tract for any re­stric­tions on their fu­ture em­ploy­ment and deal with any clauses they be­lieve are un­fair be­fore they sign.

The warn­ing from Ade­laide com­mer­cial law firm Kelly and Co comes as South Aus­tralian busi­nesses be­come more ag­gres­sive in en­forc­ing legal re­stric­tions on em­ploy­ees who leave the com­pany.

Com­mer­cial work­place re­la­tions lawyer Clare Rai­mondo says the tight labour mar­ket and highly com­pet­i­tive busi­ness en­vi­ron­ment mean more com­pa­nies are pre­pared to sue for­mer staff who break post-em­ploy­ment re­straints in their con­tracts.

A post-em­ploy­ment re­straint of­ten is writ­ten into con­tracts to re­strict an em­ployee from tak­ing con­fi­den­tial in­for­ma­tion, clients and other staff with them to a ri­val firm or when es­tab­lish­ing their own busi­ness.

It also usu­ally pre­vents those em­ploy­ees from com­pet­ing against their for­mer em­ployer by ban­ning spe­cific ac­tiv­i­ties for a spec­i­fied length of time and ge­o­graph­i­cal area.

‘‘As an em­ployee, it would pay to ad­dress any per­ceived un­fair­ness be­fore you sign the con­tract rather than wait for it to sur­face when you move on,’’ Ms Rai­mondo says.

‘‘Any new em­ployer should also be aware of the pre-ex­ist­ing con­trac­tual obli­ga­tions of an in­com­ing staff mem­ber to help avoid be­ing caught up in any legal ac­tion by the old em­ployer.’’

Ms Rai­mondo says em­ploy­ees and em­ploy­ers need to be aware of the re­straints to avoid costly legal ac­tion, with courts ap­pear­ing to har­den their views on up­hold­ing the re­straints. ‘‘We have seen far more lit­i­ga­tion around this is­sue in re­cent years,’’ she says. A com­mon mis­take for em­ploy­ers, she says, is to make the clauses un­rea­son­ably re­stric­tive and sug­gests care­fully draft­ing them to en­sure they are legally en­force­able.

‘‘We have seen cases where em­ploy­ers have looked to in­clude a clause which stip­u­lates the de­part­ing em­ployee can­not work in the same in­dus­try any­where in the world for three years,’’ she says.

‘‘This would ob­vi­ously test the def­i­ni­tion of rea­son­able in the eyes of a court and is ex­tremely un­likely to be up­held.’’

A re­cent high-pro­file ex­am­ple of a post-em­ploy­ment re­straint case oc­curred when for­mer Seven Net­work chief sales of­fi­cer James War­bur­ton lost his ap­peal to start work im­me­di­ately as chief ex­ec­u­tive of­fi­cer at Net­work Ten.

Seven is­sued pro­ceed­ings to force a post-em­ploy­ment re­straint, which was up­held by the court and stopped Mr War­bur­ton work­ing for about nine months.

Ms Rai­mondo says the de­ci­sion re­in­forces the im­por­tance of prop­erly drafted postem­ploy­ment re­straints.

‘‘They have shown to be ef­fec­tive in pre­vent­ing se­nior em­ploy­ees from ex­ploit­ing sen­si­tive or con­fi­den­tial in­for­ma­tion to com­pete with a for­mer em­ployer,’’ she says.

Pic­ture: Renee Nowytarger

James War­bur­ton could not work for nine months when Chan­nel Seven is­sued pro­ceed­ings to force a post-em­ploy­ment re­straint.

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