Trade restriction is a very old legal concept that refers to the right of individuals to do business or to practice a profession freely and without restriction. It is the privilege of an entrepreneur in a free country, in all cases that are not contrary to the law, to regulate his own way of pursuing his choices, at his sole discretion and at his choice. If the law has regulated or restricted the way in which it is done, the law must be followed. But no lack of power before the general law should limit his freedom of appreciation. A limitation of the trade clause limits a worker`s ability to accept a future job, which could be to the detriment of his current employer, usually because he is a competitor and the worker has access to confidential information. A trade restriction is an agreement between an employer and a worker or a provision of an employment contract that prevents a worker from being employed by a competitor of the employer or from setting up a business in competition with the employer after the termination of the employment. In the recent case of Southern Cross Computer Systems Pty Ltd/Palmer (No. 2), the Supreme Court of Victoria prevented an information technology specialist who was working for a competitor after maintaining a four-year restriction period. It is important that the trade clause invoked was not included in an employment contract, but in an agreement on the sale of its 40% interest in the company. McDonald J.A. found that the deduction provided adequate protection for the buyer`s value in the business, which could be attributed to the participation.
A trade restriction is imposed by a ban, desired by the employer, which prevents the worker from holding a job and being deterred from holding a job. If a definitive ban is to be made, three things must be defined: (i) there must be a clear right; (ii) an actual or duly recorded injury; and (iii) the absence of other satisfactory remedies. Even if a worker`s employment contract does not contain a specific trade clause, his employer may prevent him from using certain strictly confidential information so that it can interfere with the employer`s activities. To be applicable, a trade clause must be appropriate.