Restraint clauses in employment contracts are becoming increasingly common in Australia. These clauses are designed to restrict the activities of employees once they leave a company, with the aim of protecting the employer`s interests. However, there are strict rules surrounding the use of restraint clauses, and employers must ensure that they do not go beyond what is reasonable.

What is a restraint clause?

A restraint clause is a provision in an employment contract that restricts the activities of an employee after they leave the company. This can include restrictions on working in a particular industry, soliciting clients or customers, or poaching other employees. The aim of a restraint clause is to prevent an employee from using the knowledge, skills, and contacts gained during their employment for the benefit of a competitor.

However, restraint clauses can be controversial, as they can limit an employee`s ability to work and earn a living. For this reason, Australian courts have developed strict rules around the use of restraint clauses.

When can a restraint clause be used?

In order for a restraint clause to be enforceable, it must be reasonable. This means that it must not be too broad in its scope, and must be necessary to protect the legitimate interests of the employer. In general, courts are more likely to enforce a restraint clause if it is limited in duration and geographic scope.

The validity of a restraint clause will depend on the specific circumstances of each case, and employers should seek legal advice before including a restraint clause in an employment contract.

What are the consequences of breaching a restraint clause?

If an employee breaches a restraint clause, the employer may seek an injunction to prevent the employee from continuing to breach the clause. The employer may also seek damages for any loss suffered as a result of the breach.

However, it is important to note that a restraint clause that is found to be unreasonable or too broad will not be enforceable, and the employer will not be able to rely on it in court.


Restraint clauses in employment contracts can be a useful tool for employers seeking to protect their interests. However, employers should ensure that any restraint clause included in an employment contract is reasonable and not too broad in its scope. If a restraint clause is found to be unreasonable, it will not be enforceable in court. It is therefore important for employers to seek legal advice before including a restraint clause in an employment contract.