Drafting and enforcing post-employment restraints has a lot in common with good medicine.
It is necessary to prescribe only the “minimum effective dose” – the amount necessary to produce the desired outcome with minimum side effects. Draft a post-employment restraint too narrowly, and it provides no remedy. Draft a restraint too broadly, and toxicity sets in – it won’t be enforceable.
This is particularly important in jurisdictions other than New South Wales where the courts do not have the ability to read down a restraint that would otherwise be unenforceable under specific legislation. The decision of the Supreme Court of Victoria in Just Group Limited v Nicole Peck [2016] VSC 614, published this week, is a salient reminder of the importance of a targeted restraint. The Court decided that while Just Group had a legitimate interest to protect by restraining its former CFO, the wide ranging restraint went further than reasonably necessary and could not be salvaged. The restraint attempted to prevent the CFO from engaging in specified restricted activities for or on behalf of 50 named entities in the retail sector. It remains to be seen whether this decision will be successfully appealed.
In our series of post-employment protection blog pieces, we tackle each of the main legal and commercial issues involved in drafting and litigating post-employment restraints and unpack our Post-Employment Protections Legal Dimension map. We examine best practice approaches and the tactical issues that need to be thought through.
Please contact any of our partners to discuss the relevant legal touch-points or to access our unique online post-employment restraint solution.
