This document discusses restrictions on employment in Australia. It notes that restraints of trade must be reasonable for the parties and public. Confidential information that is protected includes client lists and information that is identifiable, not publicly known, received in confidence, and at risk of misuse. While employers can restrict employees from working in the same field for a time after leaving, any such restrictions must be reasonable. Employees have an ongoing duty not to disclose or misuse confidential information even after leaving a job. The duration of any restraint depends on how long information remains relevant and how difficult it is to acquire or replace.

1. Employment law: supplementary assessment
Restrictions on employment
In Australia, the common law doctrine of restraint of trade applies to restrictions on employment.
The doctrine requires that for any such restriction to be legally enforceable, it should be
reasonable for the parties and for the general public. A legitimate interest should be at stake,
and the restraint should be limited to protecting that particular interest (Australian Competition
Law, 2014).
Consequently, restraints of trade are usually an exception to the judicial policy of free trade.
However, legitimate business interests of employers are protected.
In determining what is legitimate in protecting confidential information it must meet certain
criteria.
In Corrs Pavey Whiting &Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443
Cummow J said:
“the plaintiff (i) must be able to identify with specificity, and not merely in global terms, that which
is said to be the information in question: and must be able to show that (ii) the information has
the necessary quality of confidentiality (i.e not common knowledge) ; (iii) the information was
received by the defendant in such circumstances as to import an obligation of confidence; and
(iv) there is actual or threatened misuse of that information.”
In this situation client lists qualify as a type of confidential information that is classified as the
employer’s property, which is protected by common law.
The employment contract in modern Australia which involves the commercial relationship
between an employer and employee, is the modern equivalent of the Masters and Servants Act
1842 (UK).
A servant must work in the interests of their Master (employer) and has a duty of care to not put
the master at disrepute or harm the interests of their master. (Price & Neilsen, 2012) While the
employee is in service of employment to their employer, they must honour the implied duty of
fidelity, which is to not use confidential information to make secret profits, not defame the
company’s reputation, or to work against the interests of their employer, such as giving
confidential information to competitors, which can affect the employer’s competitive position and
profits. (Price & Neilsen, 2012).
The case of Lindner v Murdock's Garage [1950] HCA 48 introduced the notion that
contractually, employers can ask for their employees to be restrained from working in the
profession with the same interests for a time period after their employment is terminated.

2. In this case, the former employer had a clause in their contract to not conduct a similar business
in the same area for a period of one year after termination.
Subsequently, the court found the clause in the contract unenforceable as they thought it went
beyond what was reasonable protection of the business. The clause in the employment contract
therefore must be reasonable to be enforceable.
This implied term also extends to post employment situations, where confidential information is
not to be used to the purpose of gaining economic benefit in either self-employment or in
employment to a competitor. (Price et al. 2012). This is because when the person in question
signed their name in employment to the employer, they then have a duty of fidelity to their
employer, even if it is not mentioned in policy, or even if the person had not read the policy
before signing the contract. This means the employee must not disclose or use confidential
information, not make secret profits or steal from the employer.
This is partly because the employer is the one who puts the employee in contact with the
customer. The brand or reputation of the employer is also an influencing factor in the
employee’s relationship with the customers. On the other hand, the employees own skills and
personal knowledge (e.g. talent, creativity and intuition) are difficult to restrain. For example, the
influence that an employee is able to exert over the customers could be a personal talent, e.g.
relation building skills. This ‘asset’ cannot be attributed to the employer. It is not so easy to
demarcate the two types of knowledge because they are interlinked, and they influence the
learnings by the employee (Arup, 2012).
However, employees can be restrained from soliciting those specific clients with whom they
have worked while being part of the organisation e.g. Stacks/Taree Pty Ltd v Marshall [No 2]
[2010] NSWSC 77. This is perhaps because employee’s insights about such customers can be
more easily attributed to the employer. Again, exceptions may be in order if the customers have
been acquired by the employee due to his personal contacts. However, if the employee is
actually known to use any particular information gained in an employment after he leaves the
organisation, the employer’s claims for restraint or damages gain strength.
Viewed from another perspective, restraint may not be applicable if a customer follows an
employee and initiates contact with him on his own volition (Arup, 2012).
Furthermore, the usefulness or novelty of the information, and the difficulty in its acquisition or
replication is an important factor in determining the duration of the restraint.
Duration of restraint can be determined by how long it takes for that information to lose its
currency. In this case the address book could be used to update address changes of the clients,
which means the currency of information would unlikely lose little or no value over a long period
of time. (Arup, 2012)
Also this is explicit, tangible information which can be transferred to new employees replacing
old employees, not intangible information recalled by the former employee, which could be lost
to memory over time.
However some knowledge is not considered explicit but is relationship based knowledge, which
is made known through intimacy with clients.

3. Firm or industry specific characteristics are important and need to be factored in determining
duration of injunction, if a duration is determined. (Arup, 2012).
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