Employers in the transport industry often ask us if they can
prevent an employee from working for a competitor after the
employee resigns. While it depends on the facts of each individual
case, a carefully considered and drafted restraint of trade clause
in a contract of employment may achieve this outcome.
Unfortunately, most clauses we see are invalid and unenforceable
because they have not been properly considered at the time of
entering into the contract.
The recent Victorian decision of Wallis Nominees (Computing)
Pty Ltd v Matthew William Pickett  VSC 82 demonstrates
the limits of restraint of trade clauses and the consequences of
poorly drafted clauses. In that case, the employee (Pickett) was
employed by Wallis Nominees as an IT specialist. Pickett had a
contract of employment restraining him from providing certain
services to clients of the Wallis Nominees within 12 months after
ceasing employment with Wallis Nominees.
During his employment Pickett was offered and accepted an IT job
with a client of Wallis Nominees for whom Pickett had been
providing certain IT services on behalf of Wallis Nominees. When
Pickett resigned to take up the job Wallis Nominees brought legal
action in the Supreme Court of Victoria. Wallis Nominees alleged
that Pickett had breached the restraint of trade clause in his
contract of employment by accepting a job with a client performing
similar IT services to those performed at Wallis Nominees.
The starting point for a restraint of trade clause is that it is
void as against public policy unless the employer can prove a
legitimate business interest deserving of special protection. The
Supreme Court of Victoria held that Wallis Nominees could not
enforce the restraint of trade clause in this case because it was
invalid and unreasonable for the following reasons:
First, Pickett was not considered by the judge to be at risk of
exploiting the customer connections of Wallis Nominees because he
was not the "human face" of that business and did not
have the relevant control over the business of the client to enable
such exploitation. The skills and experience Pickett had gained
while working for Wallis Nominees did not constitute a legitimate
business interest that Wallis Nominees could protect by the
Secondly, the length of the restraint clause (12 months) was
too long because it was longer than Wallis Nominees needed to find
an effective replacement for Pickett. As such, the clause was
Restraint of trade clauses need to be considered at the start of
employment, not the end. Employers wishing to rely on enforceable
restraint of trade clauses in contracts of employment should
contact Rigby Cooke Lawyers' Employment Law & Workplace
Relations team for further advice.
Chain of Responsibility
The chain is only as strong as its weakest
In the press recently, some leading and well known transport
companies have come under scrutiny and investigation regarding
alleged tampering with speeding devices on their heavy
The investigations will be far reaching, extensive and all
pervasive, and unfortunately will not stop at the operators
concerned. The whole notion of Chain of Responsibility means that
as part of any investigation, all persons in the supply chain can
and possibly will be investigated. In summary, the chain will only
be as strong as its weakest link.
What this reinforces is the critical need for all transport
operators and all persons/organisations up and down the supply
chain who have dealings with them, to have established and
"live'' Chain of Responsibility processes and
procedures which can be relied upon, and if necessary produced, in
support of a "reasonable steps" defence.
Rigby Cooke Lawyers are currently involved in a number of Chain
of Responsibility audit processes for our clients, part of which
includes assisting our clients with the roll out and implementation
of the necessary Chain of Responsibility reviews, policies and
procedures, and checking that their contracts for the supply of
transport services are compliant and afford the necessary
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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