Q&A: Contractual restraints for WA employees

This information resource is for private sector employees in Western Australia. It is general information only and not intended to be a substitute for legal advice. By using the information on this page, you agree to our full disclaimer.

There are two systems of employment law in Western Australia: a state system and a national system. While this information resource is suitable for both state system employees and national system employees, it will help you to know which system of employment law you are covered by. If you are unsure, please see our publication: “Q&A: State or national for WA employees”.

Quick Summary

A restraint of trade is part of your employment contract that stops you working in competition with your old employer after you leave.  Examples of this include:

• working in a similar business in the area you were previously employed in;
• taking your coworkers to a new employer;
• taking clients to a new employer; and
• using secret information of your old employer in your new employment.

It is difficult for your old employer to stop you from working unless they can show the restraint is needed to protect an important business interest.

It is even more difficult where your role is junior or not involved in important client relationships.

If your ex-employer is trying to enforce a restraint of trade they may seek to stop you from continuing the prohibited activity or seek compensation for your breach of your employment contract.

What is a restraint of trade?

Many restraints that are in your contract apply after you leave your job, including:

• a non-compete clause – a part of your contract that prevents you from working for similar businesses in a similar area for time period; and
• your employment contract may also prevent you from doing other things like taking co-workers to your new employer, taking clients to your new employer, or using confidential (secret) information.

Generally, it is difficult for your employer to justify and enforce a restraint of trade against you because businesses should be able to compete with each other and you shouldn’t be unreasonably prevented from working.

The starting position is that your restraint of trade clause will be unlawful unless:

For most everyday types of jobs, broad restraints are likely to be unlawful. This means if it is for a long period of time, large areas or covers a large number of activities.

Keep in mind that these are general rules and your position will depend on your specific situation and employment contract. If you still need help you should consider seeking legal advice from Circle Green here or a private solicitor here.

My employer is trying to stop me from working another job when I leave, can they do this?

Your old employer may try to prevent you from working for a new employer by including a restraint of trade in your contract. This section of your employment contract may include:

• a time period you are not allowed to work for;
• a location you can’t work in; and
• a list of activities that your employer wants to stop you from doing.

It is difficult for your old employer to enforce a restraint against you if you are a junior employee or a low-paid employee, not in a management position and not involved with customer/ client relationships.

However, in some situations a limited restraint may be lawful.

Whether a restraint of trade is reasonable depends on:

Keep in mind that these are general rules and your position will depend on your specific situation, the wording in your employment contract and your role in the business.

If you still need help you should consider seeking legal advice from Circle Green here or a private solicitor here.

How long can my employer stop me from working for? How far an area can they cover with the restraint?

Your employer can only prevent you working if it is reasonably necessary to protect their legitimate business interest.

There are several factors that the court will look at to assess whether your restraint is enforceable. These include:

• the business interest your employer is trying to protect;
• your role in the company;
• the length of your employment at the company;
• the language in your contract;
• what the restraint is trying to stop you from doing; and
• whether you breached the restraint.

Where your restraint is for a long period of time (eg years, rather than months), a large geographical area (eg all of WA) or covers a broad range of activities (eg the “restaurant industry”), it is less likely to be enforceable.