Is A Non-Compete Clause Binding If My Employer Lays Me Off?

December 17, 2024    Employment Lawyers
Is A Non-Compete Clause Binding If My Employer Lays Me Off?

In an ideal situation, the relationship between the employees of a company and the proprietors should be ethical. The company dealing in a particular product or service trains its workers so they can work with the existing workers and serve the organization’s interest.

 

However, some people use the company’s techniques, skills, and information to open a competing business and maliciously eat into their profits. The Australian legal system enables employers to enter into a non-compete clause for this matter.

 

However, the law is complex and requires the involvement of the most experienced employment lawyers in Perth WA, to ensure justice for the deserving parties. Here, we have discussed the most crucial aspects associated with this clause.

 

Non-compete clause – explained.

 

A non-compete clause is a legal agreement mentioned in the work contract of a worker that comes into action when the employee isn’t associated with the business any longer. The Australian judiciary system supports creating competition but is against using unethical and plagiarised ways to exploit someone’s genuine assets.

 

The non-compete agreement creates a level playing field for the competitors in the market. So, hiring the best non-compete lawyers in Perth to draft the agreement would always be more fruitful. It can prevent the employees from commandeering their ex-company’s resources to start a business using their confidential info, and soliciting their clients.

 

The workers who have signed the non-compete agreement your employment law lawyers have drafted are restricted from offering similar services for a certain period and within a particular geographical location. This arrangement creates one less factor the hiring company has to worry about: appointments and policies.

 

However, any agreement crossing the ‘legitimate business interests’ of the company may not be enforceable. So, discussing it with the most experienced employment lawyer in Perth before proceeding with any legal matter concerning non-compete laws is always best.

 

Things falling under ‘legitimate business interests?’

 

An Australian proprietor’s ‘legitimate business interests’ are justified by important data with limited access to protect their business, occupation, and goodwill. Examples of factors that come under the shield include:

  • Customers are essential for generating business and revenue, so companies have a reasonable interest in restricting access to their data. A former employee under the non-compete agreement is legally bound not to use the customer network information – which means they cannot contact or steal clients from their former employers.
  • The business has customer lists, pricing data, and trade secrets – which they have a legitimate interest in protecting. The use of employment law lawyers in drafting such agreements will ensure that the workers cannot utilize these data to compete with their previous employers.
  • Companies employ teams of persons and train them to become skilled in certain services. The non-compete clause prohibits one employee from recruiting or hiring the former employer’s workforce – thereby protecting their interests.

Does the non-compete clause remain in effect when the worker gets sacked?

The answer to this question is broad and cannot be given in a defined way. Generally, non-compete agreements are binding, which means that they are applicable whenever a worker leaves the company. Whether they have resigned, stopped coming to work without information, or been sacked by the employee company is immaterial.

 

However, you must remember that the court may not accept every agreement clause as safeguarding the company’s interests. They will surely test and consider its rationality while deciding whether it should be enforced. First, the agreement must be reasonable in scope and include the geographic space, duration, and type of work. The employer or their employment lawyers in Perth WA, will have to the legitimacy of their business interest in court.

 

The court can invalidate the non-compete agreement due to the following reasons:

  • Unreasonable claims from the employer.
  • Reason for your firing. (if you are sacked because your boss is closing the company down, it invalidates the agreement as having the trade secrets won’t affect the business).
  • Specific circumstances. (for example, your employers asked you to engage in criminal activity and fired you when you didn’t).
  • In some cases, the court also considers the enforcement time of the non-compete clauses. Although the law sets no official maximum duration – the agreements that extend beyond 12 months have more possibility of getting scrutinized. It would require the skills of the best non-compete agreement lawyers in Perth to defend.

Signing off

in conclusion, it is crucial to note that it’s correct to let an employer protect their confidential data ethically, but the law also has to be just for the fired employee. So, whether you are a business owner or a worker – consulting the most skilled employment lawyers Perth WA, will be helpful in the long run.

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