June 12

Stopping (Ex) Employees from Stealing your Business

Restraint of trade clauses are now quite commonly used in employment contracts, but this wasn’t always the case.

A covenant in restraint of trade, also sometimes referred to as a ‘non-compete’ clause, is a term in an employment contract that requires an employee, after leaving an employer, not to perform a particular type of work within a geographical area around the current employer’s place of business for a specified period of time.

Traditionally, employers weren’t able to include covenants in restraint of trade in their employment contracts as it was considered contrary to public policy. The law has developed over the years to recognise these clauses as valid, provided they are justified in the circumstances, particularly to protect the employee’s legitimate business interests. It is now well established that an employer may impose restraints on their ex-employees, directed at protecting the goodwill of the business following the employee’s departure.

The employer must demonstrate that, at the time of the agreement regarding the restraint:

· The restraint is required to protect the employer’s legitimate business interests, such as confidential information, goodwill, a stable workforce, customer connections, or commercial interests; and

· The restraint includes no more than is reasonably necessary to protect those interests.

When considering what should be included in a non-compete clause, the basic question is: what is the employer seeking to protect? Common reasons for inserting a non-compete clause are to ensure that employees do not take up employment with a competitor or set up a rival business.

Is the covenant in restraint of trade reasonable?

Whether the restraint is reasonable will be judged at the time the contract is made, in light of all of the surrounding circumstances, including the length of the restraint, the geographical area over which the restraint is to operate and what the employee is being restricted from doing.

Courts are more likely to uphold restraints regarding customers, clients, employees and confidential information, and less likely to uphold restraints against ‘competition’ (e.g. working for a competitor.) A ‘non- compete’ restraint which serves no further purpose than to prohibit employees from working with a rival organisation are unlikely to be enforceable, as this is contrary to public interest.

The circumstances of how the employment contract was terminated will also be relevant in assessing the reasonableness of the restraint clause. For example, if an employee is made redundant following a company restructure, a non- compete clause maybe held to be unreasonable.

The general factors a court will assess in determining the reasonableness of a particular restraint of trade clause include:

· The nature of the ‘protectable’ interest that is the subject of the agreement;

· The duration of the restraint;

· The extent of the restraint; and

· The relevant bargaining power of the parties at the time of entering into the agreement and whether, as a result, it would be unconscionable to enforce the restraint.

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May 18

Resolving Property and Financial Matters at the end of a Relationship.

Generally speaking, there are 3 issues to discuss after a relationship breaks down irretrievably.

1. Divorce (if the parties are married). You cannot apply for a divorce until separated for at least 12 months. Separation can be under the same roof if not living as a couple.

2. Parenting. If there are dependant children (under 18 or still full-time students), satisfactory arrangements need to be made for the childrens’ care and maintenance. This can often be done by informal agreement with or without the help of a counsellor, but if agreement cannot be reached, may need to be decided by a Court.

3. Property and Financial.

There are basically 3 steps in ascertaining a fair and equitable apportionment of the relationship assets.

(A) Carefully calculate the nett asset pool (including both parties’ superannuation). This will involve obtaining current statements from financial institutions, super funds, credit-card providers etc., valuations of real estate and businesses.

(B) Calculate what is a fair and equitable share for each party. The starting point is a 50/50 distribution, but this will require adjustment to take into account many factors, including:

.what the parties brought into the relationship (which becomes less important the longer the relationship),

.which party has the primary responsibility for care and maintenance of children (if any),

.any relevant health issues, and

.the parties’ respective future earning capacity.

Although this is not an exact science, an experienced family lawyer, once in possession of all relevant information, will be able to provide a reasonably accurate estimate of what each party can expect to receive.

(C) Work out how the distribution is to be achieved. Is one party in a position to “buy out” the other, or will assets (perhaps even the family home), need to be sold? Is a superannuation split necessary? Is it preferable to document any settlement by way of consent Court Orders, or can it be done by way of a Binding Financial Agreement?

Parties who have ended, or who are contemplating ending, a relationship, are in stressful, and usually unchartered waters. Early advice from a competent family lawyer will remove some of that stress and provide a blueprint for negotiating an early and hopefully amicable property settlement.

To view more information about our Family Law service please click here

May 11

Contracts – to read or not to read !

When helping our client Purchasers, a review of the Contract of Sale and Vendor’s Statement (Section 32) by Kelly and Chapman before signing will give you an understanding of what it is that you will be signing if your are the winning bidder.

Contract of Sale documents can be very complex by nature and should not be readily agreed to. In some cases, Contract negotiations are required and we can attend to this on your behalf or at least, direct you in which way to best move forward. In the event of an Auction Purchase, negotiation of the documents may not necessarily be possible therefore a review of the Contract and Vendor’s Statement documents becomes imperative.

We here at Kelly and Chapman will review these documents for your, prior to your Purchase, as part of our service. In some cases, this may be for 3 or more properties.

We will explain the context of Auction sales and Private sales (ie. sales not at auction) and will discuss with you what your contract is made up of and the main risks you need to look out for in a Contract of Sale and Section 32 for off-the-plan purchases and established homes.

To view more information about our Property Law service please click here

April 29

Important developments in the law of Family Provision

Significant amendments to the provisions regarding persons eligible to make Family Provisions claims commenced on 1 January 2015. It applies to the estates of all persons dying on and from 1 January 2015. The categories of possible claimants are wider than in the previous regime but it also excludes a number of claimants previously included.

Eligibility is limited to the spouse and children of the deceased and to the other limited categories. Those other categories include grandchildren, registered caring partners and members of the deceased’s household. For certain categories of claimant, considerations

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