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Non-Solicitation Agreements as a Restrictive Covenant on Employment or Contracting…

Recently, non-solicitation clauses where an employee or sub-contractor is forbidden to work for a competitor or anyone other than the head contractor, has been a well-litigated issue.

The issue of whether an approach by the employee, or the new client, affects whether ‘solicitation’ has taken place, is an important one as well.

In Planet Fitness Pty Ltd v Brooke Dunlop & Ors, there was a non-solicitation clause which was not intended to deal with the case where a former client of his or her own volition wished to continue to use the employee (or subcontractor), nor if a current client wanted to continue with you.
There is a contrasting case, Barrett. Here, the Court considered whether, when a client of an employer makes the first approach to an ex-employee (contractor), the ex-employee will be in breach of his contract, and it was held whether an approach by a client was a “catalyst or trigger” for the solicitation of you client does not make the employee any less the “mover” for the action happening. So, soliciting extends to circumstances where a client instigates to reconnect with a former employee.

It seems that, firstly, non-competition and non-solicitation clauses are prima facie unenforceable unless they are reasonable (in context of the parties’ and the public’s interest – the employer/ head contractor has the general onus to prove unreasonableness).

One an employee is asked to sign may be reasonable, so then it must be considered if the other party has a proprietary interest entitled to protection. For example, if they had trained an employee.
Further, the agreement must be to protect a legitimate interest held by the employer, with commonly relied upon interests being a company’s confidential information and/or the company’s customer connections held by the employee.
Basically, a restrictive covenant such as a non-solicitation agreement should not be considered in isolation and instead must be examined in the context of the nature of the business and the nature and character of the employment.  The terms must also be unambiguous. An agreement which prohibits ‘soliciting’ rather than ‘dealing’ may have vastly different consequences. See a solicitor for further information.
By | 2018-08-12T07:39:40+00:00 August 12th, 2018|Springdale News|Comments Off on Non-Solicitation Agreements as a Restrictive Covenant on Employment or Contracting…