Restraint of Trade
Employers commonly use post-employment restraint of trade clauses (“Restraint of Trade Clauses”) to protect them from employees soliciting the employer’s customers and retaining confidential information after having their employment with the Employer terminated.
The usual restraints
The usual restraints which operate at the expiration of the period of employment include restraining a former employee from “soliciting” or “enticing” the former employer’s:-
The restrictions generally imposed on a former employee are the following:-
Validity of Restraint of Trade Clauses
The common law position in relating to Restraint of Trade Clauses was set out in the leading Jersey case of Rossborough v Boon & Aziz.
In determining whether a restraint is reasonably necessary to protect the employer’s interests, the Royal Court will have to consider the following factors:-
The Royal Court will also compare the employer’s protectable interest with the relevant employee characteristics to evaluate whether the restraint goes beyond what is necessary to safeguard the employer’s protectable interest. In effect such a clause is void or unenforceable unless it imposes no greater restraint than that which is reasonably necessary for the protection of the legitimate interests of the party seeking to uphold it.
Employees need to carefully consider the Restraint of Trade Clause prior to signing an employment contract and employers need to consider how to best protect their interests.
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The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, we are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it