Telf:It should also be noted that the employer should have a real interest to protect. Only where goodwill or confidential business information requires protection can an employer prevent a worker from competing with the employer, as agreed in the restriction of the trade agreement. In essence, the agreement prohibits the complainant from holding a job with his employer`s competitor. Reddy was employed by Siemens and, after leaving Ericsson, he took a job with a competitor. A retention clause at face value cannot be accepted because the courts maintain it only if it is “reasonable.” For example, a court will not impose a clause that would unfairly infringe on a worker`s right to contribute to his or her own work. As the High Court of Australia of Buckley/Tutty (1971) 125 CLR 353 to 380 stated: “It is not possible to impose unreasonable restrictions, since it is contrary to the public interest that a person must be unduly prevented from earning a living in the most legitimate manner he chooses and that the public is illegitimately deprived of his services.” These clauses may also limit who can work and where a former employee can work. However, conditions must be appropriate for geographic area and population. For example, a retention clause may prevent former employees from working at a certain distance from their former employer or from working with a certain group of people. Below are the two most common types of deduction clauses in NZ: Always get legal advice, whether you`re an employer or an employee, and make sure you understand the scope and consequences of each agreement you sign. Trade restriction is a problem in non-compete agreements and other restrictive competition agreements, including non-invitation agreements and confidentiality agreements. In a non-compete agreement, an employee or contractor agrees to an agreement (sometimes against compensation) not to compete with the former employer or new contractor in a given sector and a specific type of work for a certain period of time. Post-employment restrictions are considered invalid and unenforceable, unless it can be shown that they are truly necessary to protect commercial interests. The employer must demonstrate that a clause does not impose more deference than is reasonably necessary to protect those interests.
It is customary for a commercial clause to be retained in an employment contract or an agreement to sell and purchase a business. But what about independent contracts? Given the complexity of a restriction clause, it is recommended that independent legal advice be obtained before attempting to impose a restriction clause on a staff member who joins a competitor or creates a competing business. Non-competition prohibitions are not inherently illegal as long as they are reasonable and do not infringe on a person`s right to do business. The court is looking at what is reasonable, taking into account all the factors in the situation. When a court finds that a non-competition clause is inappropriate, it is generally based on the principle that it constitutes a trade restriction. In a recent case, Reddy/Siemens Telecommunications (Pty) Ltd, which contains a restriction on the trade agreement, the legal principles of trade restriction, as applied by the South African courts, were well explained. Trade restrictions apply in two different cases: even if a worker`s employment contract did not contain a specific limitation of the trade clause, his employer may prevent him from using certain strictly confidential information so that he can affect the employer`s activities.