Even when employers have introduced restraints that prevent employees from working in competition, those restraints may not stand up. In this NSW case, the court said that the non-compete restraint only stopped the employee from working for a competitor in the part of the business in which they had worked.
Keep reading to find out more.
What happened in News Life Media Pty Ltd v Janeke  NSWSC 1835?
News Life Media Pty Ltd (NLM), employed Evadne Janeke as a ‘Commercial Integration Manager.’ In her employment contract, Janeke acknowledged that she would have access to what was described as ‘trade secrets’ or ‘confidential information’ and agreed to be bound by certain restraints.
Janeke then wished to work for Pacific Magazines, part of the Seven West Media Group, and NLM decided to engage the restraints.
‘Competition' is not enough to win
The court found that even though there was competition between NLM and Pacific Magazines, this was not enough to engage the restraint.
To determine if the restraint was enforceable, it was necessary to go further and enquire what it is that Janeke would do, in the course of her employment by Pacific Magazines and whether her actual duties would be in competition with the relevant part of NLM’s business.The evidence did not show that Janeke's work for Pacific Magazines, would be in competition with the work she did for NLM.
Different rules for different employees? No restraint!
The court also ruled that even if the restraint was engaged, it was not valid. NLM was indiscriminate in its approach to imposing restraints on employees. Many employees (including those exposed to trade secrets), had no restraints at all. This meant that the restraints were imposed as a matter of form, rather than to protect NLM’s legitimate interests.
Limited shelf-life? Put that claim back on the shelf
It was also determined that the material to which Ms Janeke was exposed in the course of her employment was not confidential enough to require protection by a restraint of trade. The evidence showed that a significant amount of the information in Ms O’Brien’s categories was known to people who were not subject to any restraint and the material had a limited “shelf life.”
NLM could not enforce the restraint and was ordered to pay costs for bringing this claim.
Employers, remember that you can’t restrain someone from using their knowhow, that they built up legitimately over many years in a particular industry.
Contact Peter McNamara to prepare your restraints and non-competes. Fix the problem before it damages your business.