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May 04, 2021

Question from Hina Kapoor ([email protected])

Hi Team ,

What does “lack of post-employment restrictive covenants” in employment agreement means? Anything we need to consider as an employer with this condition? What is the legal impact of this?

Thanks
Hina

Hi Hina,

I believe that you’re asking for clarification over what a post-employment restrictive covenant is and why they may be useful in an employment contract.

Post-employment restrictive covenants (also known as post-employment restraints) are clauses in an employment contract that restrict an employee, after his/her employment, from acting in a way that competes with or undermines the business interests of their employer.

As an example, a common post-employment restraint is a requirement that a former employee does not solicit (e.g. induce or “poach”) client(s) he/she has dealt with in their employment over a certain period of time. It is also common for post-employment restraints to restrict an employee from competing with their former employee and to impose confidentiality obligations.

I encourage you to have a read through the ‘Restraints of Trade’ section in the Portner Handbook so that you can get an understanding of how these clauses might work. I should highlight, though, that post-employment restraints will only be enforceable against a former employee if they go no further than protecting the legitimate business interests of the employer.

I hope this provides you with some clarification.

Kind regards,

Matthew Gough

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