Recent Australian Superior Court Decisions: 6 Month Restraint Of Trade Upheld, College Lecturer Denied Superannuation

• Published date: 29 June 2023
• Law Firm: L&E Global
• Author: Greg Robertson (Harmers Workplace Lawyers), Mariam Chalak (Harmers Workplace Lawyers) and James El-Jalkh (Harmers Workplace Lawyers)

Two significant decisions have come out of the superior courts of Australia in the month of May. These decisions have important implications for employers and their rights and obligations in relation to two important issues:

1. the enforcement of restraint of trade obligations in a written contract of employment, explored in Janala Pty Limited v Hardaker (No 3) [2023] NSWSC 446; and
2. the distinction between an employee and independent contractor explored in JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76.

This article provides a summary of the two decisions above and key takeaways for employers.

1 The enforceability of restraint of trade clauses

The Supreme Court of New South Wales has held that a 6 month restraint on a former project manager (Mr Hardaker) for a sensitive freight services company (COPE) from being employed by a competitor or soliciting clients was enforceable.

In his decision of 2 May 2023 in Janala Pty Limited v Hardaker (No 3) [2023] NSWSC 446, his Honour Justice Mark Richmond held that COPE had legitimate interests in protecting its confidential information and goodwill. The latter concerns personal relationships an employee builds with their employer's clients.

His Honour held that the 6 month restraint provided a balance between the reasonable protection to which COPE was entitled and the project manager's right to practise a trade or profession. His Honour reached that decision taking into account the fact that:

1. Mr Hardaker had a client facing role and was in contact with key employees of COPE customers, with knowledge of confidential information such as pricing;
2. Mr Hardaker had an important role in dealing with the healthcare sector, which was of strategic importance to COPE;
3. restraining Mr...