Aspiring Law
10 January 2023, 9:46 PM
Many of us will know someone who has had to go on ‘garden leave’ because of a restraint of trade in their Employment Agreement.
There are two main types of restraints of trade:
Restraints of trade can only be enforced if they are reasonable. Restraints need to be specific and genuine, and it falls on the employer to prove the circumstances are reasonable.
The Government has now introduced a new piece of legislation to regulate this area of law and it will change the status quo and limit the use of restraints of trade.
Here’s how it’s likely to work.
The big picture
Largely favouring employees, the new bill would stop employers putting in ‘deterrent’ restraints that they know are not enforceable, leaving employees free to take up new job opportunities without repercussions from their ex-employer.
Any compensation payments would be an added expense to employers. Employers would also have to think about including unique, specifically drafted clauses to ensure they comply with the requirements.