19/08/2026
Are post-termination covenants against competing, soliciting or dealing valid and enforceable against a former employee?
The starting position regarding restrictive covenants is that they are generally regarded as unenforceable on the grounds of being contrary to public policy. In certain circumstances though, they may be found to be enforceable where the employer is able to show that:
• The employer has a legitimate business interest to protect; and
• The time frame and geographical coverage of the restraint is reasonable in light of that interest.
For example, preventing an employee from pursuing or dealing with clients, customers or suppliers they had contact with during the course of their employment, may be a legitimate business interest to protect. So to may prohibiting a former employee from working for a competitor or establishing his or her own business in competition with the former employer in the geographical area and for the time period specified in the restraint clause.
Courts in Australia will often read down the geographical scope and time frame of clauses that would otherwise be unenforceable to what is regarded as a reasonable restraint. For that reason, clauses are often drafted with cascading dates and geographical areas.
If you require advice on your rights and obligations as an employer or employee, please call us on 07 3036 0649 or email [email protected]