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Employment Contract

Post-Employment Restrictions

Post-Employment Restrictions

Will the employee be restricted by any of the following clauses after employment ends?

Frequently Asked Questions
Why is it important that the restrictions are reasonable?If your restriction is broader or longer than the court feels is reasonable, a judge may strike the clause from the contract, which leaves you with no restriction at all. Therefore, you should ensure that your restrictions are reasonable.

A restriction of 6 months is usually considered reasonable for a non-compete clause depending on the nature of the job. However, a longer period may be reasonable for a non-solicitation clause.
What is a confidentiality clause?Confidentiality Clause
An employer can protect their confidential information by including a clause in the employment contract that says that all confidential information including work product belongs to the employer. Confidential information is broadly defined to protect everything from trade secrets to customer lists.

Confidentiality Period
Confidentiality obligations can be for a fixed period or can be indefinite until the confidential information enters the public domain and becomes public knowledge. If a fixed term is selected then remember that confidentiality protection ceases after the period has lapsed. Once the confidentiality period is over the employee can then use or disclose the confidential information in any way they choose without the permission of the employer.
What is a non-solicitation clause?Non-Solicitation Clause
A non-solicitation clause prevents the employee from inducing other employees or contractors from leaving the employer or from interfering with the employer's relationship with other employees in general. This means that the employee cannot invite the employer's other employees to move to another workplace.

Courts MAY NOT enforce a non-solicitation clause if:
  • the clause could be harmful to the public (e.g. if it could depress the local economy)

  • the clause is broader than necessary to protect the employer

  • the clause has unreasonable time and geographic restrictions.
What is a non-competition clause?Non-Competition Clause
A non-competition clause prevents the employee from unfairly competing with the employer after the employment is terminated.

Remember: Courts MAY NOT enforce a non-competition clause if:
  • the clause could be harmful to the public (if it restricts commerce and depresses the local economy)

  • the clause is broader than necessary to protect the employer

  • the clause would cause undue hardship on the employee (too difficult for the employee to find a new job) or

  • the clause has unreasonable time or geographic restrictions

As a matter of public policy, courts have said that a former employee cannot be prevented from working in their chosen trade except to the extent that is necessary to protect the previous employer. A non-competition clause may be upheld however where a former employee could have found reasonable employment that was not in direct competition with the former employer.
In general, when deciding whether to include a non-compete clause, it would be unfair to restrict the future employment of an average employee (carpenter or secretary) who does not have access to confidential information.

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Last Updated April 12, 2024

What is an Employment Contract?

An Employment Contract is a contract used to establish the rights, responsibilities, and obligations of a working relationship between an employer and an employee.

An Employment Contract involves:

  • An employer, who can be a person or an entity (an organisation or a corporation, for instance) and who is hiring another person to work for them
  • An employee, who is normally a person as opposed to an organisation or a corporation and who is being hired to work for an employer

An Employment Contract is also called a/an:

  • Employment Agreement
  • Employee Contract
  • Job Contract
  • Job Agreement

If you are being hired to work for someone as an independent contractor as opposed to an employee, you should use an Independent Contractor Agreement instead.

What information is included in an Employment Contract?

Generally, an Employment Contract will include:

  • The employee's name and contact information
  • The name of the employer (who can be an individual, organisation, or corporation, depending on the situation) and their contact information
  • The place of employment's address or addresses
  • Particulars about the position, including job title and description, the average number of hours the employee will work, when the position will start, whether the position is permanent or temporary, etc.
  • Details about pay and benefits, including remuneration type (e.g. salary, hourly, etc.), pay period (e.g. weekly, fortnightly, etc.), rate of pay (e.g. $25 per hour, $75,000 a year, etc.), annual vacation time, and other benefits (such as paying toward a superannuation fund)
  • Technicalities regarding termination notice (the amount of notice that will be required by the employer to terminate the employee and vice versa)

Often, an Employment Contract will also include specific clauses restricting certain conduct during or after employment, such as:

  • Confidentiality clause: this clause helps employers keep confidential information private by prohibiting employees from inappropriately using or discussing company secrets, business strategies and plans, product information, and more
  • Non-solicitation clause: this clause prevents employees from encouraging coworkers to work for a new organisation
  • Non-compete clause: this clause stops employees from working for direct competitors during or after employment; to be enforceable, the terms in a non-compete clause, sometimes called a non-competition clause, must be reasonable (e.g. using a reasonable time period, using a limited and reasonable geographical location, etc.)

What is the difference between a full-time and part-time employee?

In most cases, an employee is classified as full-time or part-time:

  • A full-time employee is generally defined as someone who works approximately 30 hours or more a week. They are typically given benefits (such as a health and dental package) that other employees may not receive.
  • A part-time employee is generally defined as someone who works less than 30 hours a week with a guaranteed minimum number of hours (e.g. they typically work 15 hours a week).

Notice is generally required to terminate a full or part-time employee.

A person can also be hired as a casual employee (someone who is not expected to work a set number of hours per week and who only works when needed). Notice may not be required when terminating a casual employee.

What is the difference between a permanent and temporary employee?

Generally, an employee will be hired on a permanent or temporary basis:

  • A permanent employee is an employee who has been hired indefinitely, meaning they do not have a predetermined end date in their Employment Contract.
  • A temporary employee is an employee who has been hired for a specific period of time, meaning an end date has likely been included in their Employment Contract; a seasonal employee (a person who is hired for a particular period or season, like the summer season) is a type of temporary worker.

You may also see someone get hired as a contract worker. Typically, a contract worker refers to an independent contractor or subcontractor, which means an Independent Contractor Agreement will be used to outline the working relationship instead of an Employment Contract.

Related Documents:

  • Employment Offer Letter: Use an Employment Offer Letter to extend an employment offer, including conditions like start date and hourly rate, to a potential new hire.
  • Employment Termination Letter: Send an Employment Termination Letter to an employee to formally advise them that they've been terminated from their position.
  • Employee Evaluation: Create an Employee Evaluation to review an employee’s performance and advise them of any areas for improvement.
  • Resignation Letter: Send a Resignation Letter to an employer to formally advise them that you will be ending your employment with their company.
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