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Challenging an employee's post-employment conduct

Challenging an employee's post-employment conduct

Before challenging a former employee's post-employment conduct, you have to be sure your own house is in order. One employer found out the hard way.

The Victorian Court of Appeal recently found that an employer’s breach of an employment contract prevented them from enforcing restraint provisions against a departing employee.

An accountant had a falling out with his employer over bonus payments he believed were owed to him. After the employer refused to pay the bonuses, the accountant took steps to set up his own business. The employer sought to enforce the contractual restraint that would have prevented this from happening for 12 months.

The Court concluded that the accountant’s interpretation of the bonus provisions was correct and the employer should have paid the bonuses. As the accountant acted within his rights, the employer’s breach of contract ended its right to enforce the restraint provisions once that breach was accepted as a termination of the contract by the accountant.

 

The bottom line

Employers who want to enforce restraint provisions in an employment contract should carefully consider their actions where the termination is contested.

Similarly, when an employer’s decision is challenged by an employee as a contractual breach (for example, as a wrongful dismissal or underpayment), then a careful assessment of possible scenarios should be made to fully appreciate the possible consequences.

Want to learn more? Keeping employment restraints intact by Matthew Robinson is full of tips to help you navigate the process of enforcing post-employment restraints.

 

Questions?

Before you consider doing something that may impact your ability to enforce post-employment restraint provisions, call the REEF Helpline on 1300 616 170.



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