Usually, restraint of trade clauses are enforced by way of
injunction. However, a trainee accountant has been ordered to pay
his ex-employer the sum of AUD$188, 495.65, plus costs and
interest, for breaching a restraint that contained a liquidated
The employee signed a restraint that prohibited him from
providing certain accounting services for three years after his
employment ended to clients of the employer for whom he had worked.
The liquidated damages clause provided where the employee breached
the restraint, he had to pay 75% of the fees incurred by the
particular client for services rendered.
The employee left the employer to take up part-time employment
with both a major client of the employer and a competing accounting
firm. Then, after requesting quotes from both firms, the major
client terminated its retainer with the ex-employer and engaged the
competing firm to perform its accounting services. The employee
then commenced providing accounting services to both the major
client and other clients of the ex-employer, whilst working for the
The court upheld the restraint, finding the legitimate interest
the employer sought to protect was the 'trade'
connection it had with those of its clients who had dealt directly
with the employee – a connection long regarded as being
capable of protection.
The liquidated damages clause (which is often found in
construction contracts) was also not found to be "out of all
proportion" so as to amount to a penalty and was a fair
measure of the damages looking forward.
Birdanco Nominees Pty Ltd v Money  VSCA 64
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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