Employment Law – Background
The Victorian Court of Appeal reaffirmed a decision that an employer was unable to enforce a restraint clause against an employee. The accounting firm’s breach of an employment contract consequently ended its right to enforce a restraint clause against the accountant. The case highlights the importance of carefully assessing any differing views between the employee and employer in employment law.
Employment Law – Facts
In essence:
- the employee-accountant signed an employment contract in 2012
- the contract contained a restraint clause that operated for 12 months. Notably, the terms were found to be reasonable by judges in earlier cases
- the accounting firm expanded its business over 2015-16
- the accounting firm denied the accountant certain bonuses he believed he was entitled to
- as a result, the accountant requested payment to which the employer refused
- the accountant took a week’s leave. A few days after he returned, he informed the employer he considered the refusal to pay the bonuses as a repudiation of the employment contract
- especially relevant, the account set up his own business. Consequently, the employer sought to enforce the restraint clause
Employment Law – Decision
The Victorian Court of Appeal:
- concluded that the accountant-employee’s interpretation of the bonus clauses was correct
- held that the organisational changes could not justify the refusal to pay hence he should have been paid the bonuses
- found that in conclusion, the refusal to pay was a breach of the employment contract. Consequently, the right to enforce the restraint clause ended
Employment Law – Tips for Employers
Our Matthews Folbigg Workplace Solutions employment law team recommends employers: [...]
