Employment law – Post-
termination Covenants
Non-competition, non-solicitation, non-dealing, non-poaching and confidentiality clauses = all restrictive
covenants as seek to prevent employee from undertaking a specified action or actions
Restrictive covenants generally enforceable during the course of employment – but imposing restrictions after
contract has been terminated are prima facie void on the basis they amount to a restraint of trade – Nordenfelt
v Maxim
Step 1: Define PTC and general rule
General rule = usually unenforceable as a illegitimate restraint of trade
Contractual clauses which may be contained in contract of employment to restrict your right to conduct activities
with your former employer after the employment relationship has ended
Step 2: When is a PTC enforceable?
Must comply with:
1. The PTC is necessary to protect a legitimate business interest and
E.g. trade secrets, highly confidential information, the need to maintain a stable workforce, connections with
clients and/or suppliers
2. The clause is drafted reasonably and is no wider than is strictly necessary to protect that
business interest (with respect to time, geographical area and market place)
Must be considered whether:
o The employee even has the information or carries out the business activity that is purported to being
protected
o The protected information is subject to rapid change in the industry in question (in which case, an
otherwise potentially reasonable time constraint of one year may in fact be unlikely to be considered
reasonable) and
o The employer actually does business in all the geographical areas described (if not, it very unlikely
that the clause will be considered reasonable)
Step 3: Types of post termination restrictions. Identify the legitimate business interest the
clause is seeking to protect.
Confidentiality Clause
Imposes a duty to keep secret the employer’s trade secrets or confidential information
Trade secrets or confidential information could include, for instance, know how, pricing lists or customer lists
Even without express contractual confidentiality clause you still owe an implied duty of confidentiality to your
former employer
Non-Solicitation Clause
Imposes a duty not to approach your ex employer’s customers or prospective customers with a view to doing
business with them
termination Covenants
Non-competition, non-solicitation, non-dealing, non-poaching and confidentiality clauses = all restrictive
covenants as seek to prevent employee from undertaking a specified action or actions
Restrictive covenants generally enforceable during the course of employment – but imposing restrictions after
contract has been terminated are prima facie void on the basis they amount to a restraint of trade – Nordenfelt
v Maxim
Step 1: Define PTC and general rule
General rule = usually unenforceable as a illegitimate restraint of trade
Contractual clauses which may be contained in contract of employment to restrict your right to conduct activities
with your former employer after the employment relationship has ended
Step 2: When is a PTC enforceable?
Must comply with:
1. The PTC is necessary to protect a legitimate business interest and
E.g. trade secrets, highly confidential information, the need to maintain a stable workforce, connections with
clients and/or suppliers
2. The clause is drafted reasonably and is no wider than is strictly necessary to protect that
business interest (with respect to time, geographical area and market place)
Must be considered whether:
o The employee even has the information or carries out the business activity that is purported to being
protected
o The protected information is subject to rapid change in the industry in question (in which case, an
otherwise potentially reasonable time constraint of one year may in fact be unlikely to be considered
reasonable) and
o The employer actually does business in all the geographical areas described (if not, it very unlikely
that the clause will be considered reasonable)
Step 3: Types of post termination restrictions. Identify the legitimate business interest the
clause is seeking to protect.
Confidentiality Clause
Imposes a duty to keep secret the employer’s trade secrets or confidential information
Trade secrets or confidential information could include, for instance, know how, pricing lists or customer lists
Even without express contractual confidentiality clause you still owe an implied duty of confidentiality to your
former employer
Non-Solicitation Clause
Imposes a duty not to approach your ex employer’s customers or prospective customers with a view to doing
business with them
