By Abraham Ash and Elodie Cheesman -
Snapshot
- Can a party who has repudiated a contract of employment still enforce post-employment restraints?
- The decision of the Full Court of the South Australian Supreme Court in Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 sheds new light on this issue.
The enforceability and enforcement of postemployment restraints are matters which many employers and employment lawyers face. Putting aside the ‘typical’ issues regarding reasonableness and legitimate business interests, another issue is whether postemployment restraints continue to operate where an employer has repudiated the employment agreement. If the restraints are otherwise reasonable, will the employer deprive itself of a right to enforce the restraints in light of the manner in which the employment relationship has come to an end?
The recent decision of the Full Court of the South Australian Supreme Court in Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 (‘Richmond’) sheds new light on this vexed issue. The Court rejected the claim that a restraint clause included in a number of business sale agreements was necessarily unenforceable by a party who repudiated the contract.
While this is obiter (because the Court decided that there was no repudiation on the facts, and on construction the restraint clauses would not have been enforceable upon repudiation) and the case did not specifically concern an employment contract, as an intermediate Court of Appeal decision, the reasoning in this case may be regarded by the judiciary as persuasive and may have significant implications from an employment perspective.
