Restraint of Trade Provisions: Be careful making changes to employment arrangements

The recent decision of Crowe Horwath (Aust) -v- Loone [2017] VCSA 181, has held that restraint of trade provisions are unenforceable if the employer varies and therefore repudiates the contract.

In this decision, the Court found that the employer had lost its ability to restrain its former employee from setting up in competition because it had made some changes to both the employee’s role and his bonus scheme structure. The Court held that these changes amounted to repudiation of the existing employment agreement by the employer and therefore the employee could terminate the contract of employment without suffering the effects of the restraint provision.

Critical to this decision was that the employee left the employ of Crowe Horvath after Crowe Horvath changed the nature of the bonus scheme that the employee was previously entitled to, and his role within the organisation.

If you are wanting to change your senior employees’ entitlements, and do not want to risk losing out on your restraint of trade protection, then contact Adam Foster at Lewis Holdway Lawyers for assistance on (03) 9629 9629 or find us at www.youremploymentlawyer.com.au.