Unpacking Post-Employment Restraint of Trade Decisions: The Motivators of the Key Players

Abstract

Restraints of trade are aimed at limiting the capacity of employees to move from one job to another and taking important knowledge or techniques with them (to the detriment of the first employer). The current law focuses on the reasonableness of the clause at the time of its signing. A more detailed examination of the decisions made, by the employee, around the breach of such a clause suggests that this may not be the most effective approach. This assessment is made through a consideration of the motivators of the parties, the role of the legal tests, the risks relevant to their decisions and an examination of operation of the law itself. In short, if the goal of the regulation in this area is to limit the breach of restraints, then a focus on the decision of the employee to breach (or not) the clause may be more effective.