Mr Farah was a computer engineer employed by Thinkstorm Pty Ltd.
They consulted him to the Queensland Department of Health in the
use of "WorkBrain" – a software system that enables
employers to manage their workforce (and seeks to obviate the need
for HR departments run by humans).
Thinkstorm provided recruitment and consulting services to QLD
Health. After 5 years' employment with Thinkstorm, Mr Farah
handed in his notice and pursued greener pastures; promptly
obtaining a higher paid position with Paxus Australia Pty Ltd.
In his new role with Paxus, Mr Farah was conveniently doing the
same thing: he continued to provide WorkBrain technical consultancy
services to QLD Health (as they say, stick to what you know).
Thinkstorm caught wind of Mr Farah's defection to a competitor
and swiftly sought to enforce a 12-month restraint of trade against
him in injunctive proceedings in the NSW Supreme Court.
It was not in dispute that Mr Farah's employment with
Thinkstorm was previously governed by a series of three written
contracts. Mr Farah disputed that the most recent contract –
a letter of offer dated 30 June 2014 that moved him from a
fixed-term contract to a continuing position and reduced his salary
to $188,400 – governed his employment terms because it was a
'letter offer' and there was no record of him having signed
Justice Geoff Lindsay found that, regardless of the absence of a
signed contract, "by conduct, the defendant accepted the
offer conveyed to him". Accordingly, the letter governed
the conditions of Mr Farah's employment, and he was subject to
the undertaking contained in it that he would not engage in
solicitation or competition for a period of 12 months from
termination of his employment.
There was no dispute about the construction of the restraint
provisions in the contract. Judge Lindsay found that the restraint
"intended, inter alia, to prevent the defendant from
working for QLD Health's Payroll Portfolio section, in the
provision of WorkBrain services, during the 12 months
following" Mr Farah's termination of employment.
Mr Farah contended that Thinkstorm's application should fail
"for want of an interest able reasonably to be
protected" by the restraint. His Honour did not accept
this argument, because although Mr Farah "exercised
considerable autonomy in the performance of his duties
owed" to QLD health, he did so as an employee of
Thinkstorm, and he was contracted by Thinkstorm to provide services
to QLD Health. Thinkstorm's regular contact with QLD Health,
independent of Mr Farah, established "commercial goodwill
vis-ŕ-vis QLD Health, which chooses to obtain services
through consultants". How QLD Health chose to engage
consultancy services through a variety of corporations did not, in
the Court's view, deprive Thinkstorm "of goodwill
capable of being protected by a reasonable post-employment
On the enforceability of the restraint clause, Justice Lindsay
noted that it appeared to be at the "outer
limits" of what would be a reasonable duration, but that
consultancy agreements in the industry commonly included restraints
expressed to operate for 6 to 12 months. In the context, the
restraint was found to be enforceable and valid.
In making that finding, His Honour noted that Mr Farah was not
constrained to provide his professional services to parties other
than QLD Health, and took into account that the services Mr Farah
is qualified to provide required "particular expertise
with commensurate remuneration", that he was not an
"unskilled worker, but...a highly-paid
consultant" whose services QLD Health chose to acquire
On Mr Farah's submissions that he was not paid his annual
leave entitlements, Justice Lindsay found that Mr Farah had not
contended that "any unperformed obligation" was
"interdependent with the obligation to comply with the
restraint undertaking". Mr Farah was
"peeved" that Thinkstorm did not secure for him
the position with QLD Health that he was able to secure through
Paxus. However, he did not contend that a perceived failure of
Thinkstorm to advance his interests as well as he may have hoped
constituted a breach of contract. "It provides no ground
for a refusal to hold [Mr Farah] to his contract with
Thinkstorm". Mr Farah is restrained from performing any
services involving WorkBrain for QLD Health until 4 November
Hot tip: sticking to what you know when obtaining new
employment may backfire when a client-specific restraint that
protects an employer's legitimate interest is likely to be
enforceable and valid. It may be appropriate to widen the job
search, and seek legal advice on your options.
The word 'because' is understood by toddlers, but its legal nuance has baffled some of Australia's great legal minds.
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