Former Employer Trying to Enforce a Restraint of Trade? How to Respond

You took a new role with a competitor, opened your own business, or started serving former clients — and now your old employer’s lawyer has sent a letter accusing you of breaching a restraint of trade clause and demanding you stop. The letter is calculated to scare you into compliance. The reality is that most restraint of trade clauses in Australian employment contracts are unenforceable, and the right response — sent promptly and on the right legal basis — usually ends the matter.

The legal context — restraint of trade is presumed void

Australian common law treats every restraint of trade as void unless the party seeking to enforce it can show it goes no further than reasonably necessary to protect a legitimate business interest. This is a high bar. Courts assess (a) the legitimate interest being protected (typically confidential information, customer connections, or workforce stability), (b) the geographic scope, (c) the duration, and (d) the activities restrained. New South Wales is the only Australian jurisdiction with statutory modification powers (Restraints of Trade Act 1976), allowing a court to read down an unreasonable restraint. In every other state, an unreasonable restraint typically falls entirely. The federal government has also signalled likely reform of post-employment restraints, particularly for low and middle income workers.

Common employer arguments and why they fail

• “You signed the contract.” Signing does not save an unreasonable restraint. Reasonableness is a question for the court.
• “You have our confidential information.” Confidential information is protected by separate equitable obligations and does not need a restraint clause to enforce.
• “You’ll poach our clients.” Customer connections are protectable, but only to the extent necessary — a 12-month, Australia-wide ban on contacting any former client is rarely reasonable for a junior employee.
• “The clause is in cascading tiers.” Cascading restraints (e.g. “12 months / 6 months / 3 months”) are interpreted strictly and often fail outside New South Wales.

The Legal Response approach

A formal Legal Response sets out why the restraint is unenforceable on the facts — the absence of a legitimate protectable interest, unreasonable scope or duration, lack of consideration if the restraint was added mid-employment, or jurisdictional issues — and puts the former employer on notice that any injunction proceedings will be defended and a costs order sought. A well-drafted response usually closes the matter without litigation because the employer’s lawyer reassesses the strength of the claim once the response lands.

What Claim Done delivers (flat fee)

The Legal Response service is a structured, citation-heavy reply prepared after you walk through the wizard with the clause wording, your role, the new role, and the relevant facts. Claim Done generates a polished PDF response citing the relevant restraint of trade common law and any applicable statute (such as the Restraints of Trade Act 1976 in New South Wales), ready to send to the former employer or their lawyer.

What to expect — and the litigation escalation

Most enforcement attempts evaporate once a properly-drafted Legal Response arrives, because the cost-benefit shifts against the former employer. If they push on with court proceedings (typically seeking an interlocutory injunction in the Supreme Court of the relevant state), the response forms the foundation of your defence.