What are restraint clauses?
What are restraint clauses?
Restraint of trade clauses are becoming increasingly common in employment contracts. These clauses operate to protect a business’ legitimate interests, such as its confidential information and/or its customers and connections. Restraint clauses have generally been considered to be unenforceable in a legal context.
What is the purpose of a restraint of trade agreement?
A restraint of trade agreement is basically a contract in which one party agrees to restrict her freedom of trade – in a specified area and for a specified period – to the benefit of the other party.
Can I refuse to sign a restraint of trade?
That if an employee refuses to sign a legitimate Restraint of Trade, do not threaten him with dismissal, but engage the employee in terms of a section 189 consultation process, which has as one of its objectives, measures to avoid a dismissal.
How long does a restraint of trade last?
For example, a restraint which is for two years and covers the whole of the country could be unreasonable – but one which is for six months and covers the province in which the employer’s business mainly operates could be reasonable. The same principle applies to the scope of activities which the restraint covers.
Is a restraint of trade included in gross income?
To the recipient, the concept of gross income excludes capital nature income. As alluded above a restraint of trade payment is capital in nature. It is therefore non-taxable to the recipient.
The idea behind a restraint clause in an employment contract is to essentially protect the employer’s commercial interests. Restraint clauses will normally be drafted on the basis of seeking to prevent and to restrain a former employee from one or all of the following: Using the former employer’s suppliers.
What is a post employment restraint?
Post employment restraints are a common feature in many employment contracts, especially for employees who hold senior roles. the employee’s work involved personal contact with the employer’s customers and where the employee may be able to use those connections to entice customers away; and.
What was the restraint clause in my employment contract?
The restraint clause, in the employment contract, restraint Mr Pearson from being concerned with or interested in a “restrained business” in any capacity (including as an employee) during the restraint period of two years. “Restrained business” was defined as a business or operation similar to or competing with the business of HRX.
Can a victim of constructive dismissal go to court?
A victim of constructive dismissal can either terminate employment or apply to the ET or in circumstances where there is a contract of employment, issue a summons in a court of law claiming damages under common law for breach of that contract of employment. Examples of employers conduct that may justify constructive dismissal include :-
How are restrictive covenants in employment contracts enforced?
Restrictions must be no wider than required to protect the legitimate business interest of the employer, otherwise they will be viewed as too wide and unenforceable due to restraint of trade. How enforceable are restrictive covenants in employment contracts?
Can a restraint of trade clause be not enforceable?
This entails that the party to the contract in which such a restraint of trade clause is present, can only claim that it is not enforceable, if he is able to prove that the clause is in fact, against public interest. This is however, not as easy as it sounds.