Federal Court Stops An Employee From Defecting To A Competitor
A team leader at finance company, Liberty Financial, was prevented from taking up a role with a competitor for at least a year. Within days of receiving the paperwork, the Federal Court ruled the restraints in the employee’s contract were enforceable and he was not allowed to compete with his previous employer.
Liberty Financial sued the employee as well as his new employer and their parent company, Wingate. The fear was that the employee would take confidential information and relationships from Liberty to his new employer. This would effectively amount to stealing part of Liberty’s business.
At the injunction hearing, the Court not only awarded compensation for the breach of the employment contract, but they even prevented the employee from taking up the new position. The orders were made very quickly to ensure Liberty’s business was protected.
The case shows the power of a well drafted restraint in an employment contract. An enforceable restraint will protect the heart and soul of your business – your customers, your team, your suppliers and your systems.
But beware, it is not a case of one size fits all. If the restraint is too broad for your circumstances it will be unenforceable. The Court will examine the role of the employee as well as the nature, length, and breadth of the restraint. All those factors must be balanced before the Court will enforce any employment restraint.
Our experienced and specialised Employment Lawyers at Taurus Legal Management can make sure you get the restraints in your employment contracts rights. If you need any assistance, please do not hesitate to contact the author Alex Martin, Director, on 03 9481 2000 or alex@tarusulawyers.com.au.
[The full Federal Court decision can be found at: Liberty Financial Pty Ltd v Jugovic [2021] FCA 607]