Restraint of trade clauses: are they enforceable in Queensland?

Employees and business partners routinely sign contracts containing non-compete or non-solicitation clauses without realising those clauses occupy unusual legal territory. Unlike most contract terms, a restraint of trade is presumed void from the outset. It only becomes enforceable if the party relying on it proves it is reasonable. That presumption shapes everything about how these disputes play out¹²³.

Why the law starts from suspicion

Competition is the default; stopping someone earning a living needs justification. Courts therefore ask two linked questions:

1. Does the employer have a legitimate interest worthy of protection?
2. Does the clause go no further than necessary to protect it?

Recognised legitimate interests include trade secrets and confidential information, customer connections built through the role, and workforce stability where key people hold teams together. Generic desires to eliminate competition do not count on their own.

A worked example makes the analysis concrete. Imagine a senior account manager at a Gold Coast logistics firm who personally services twenty major clients, knows their pricing arrangements and holds their mobile numbers. A twelve-month non-solicitation covering clients she managed has a real prospect of enforcement. The same clause applied to a warehouse picker with no client contact would almost certainly fail, because there is nothing for it to protect. Same wording, opposite outcomes; context is everything.

Reading the typical clause

Restraints come in several flavours:

• Non-compete: bars working in a competing business within an area for a period
• Non-solicitation of clients: stops approaching customers you dealt with
• Non-solicitation of staff: stops recruiting former colleagues
• Non-dealing: broader bans on dealing with certain customers at all

Reasonableness is judged mainly by reference to what was reasonable when the contract was made, informed by the role’s seniority and access. A six-month client non-solicitation for a senior sales manager with deep account relationships is a very different proposition from a blanket two-year national ban imposed on a junior technician.

What courts do with over-wide clauses

Here employers get some comfort and employees should not celebrate too early: courts frequently prefer to read down a clause rather than delete it. If a twelve-month worldwide restraint would never fly, a court may enforce a shorter duration or tighter radius instead, effectively rewriting the term to its reasonable core.

A few practical consequences follow:

• Employees cannot assume a ridiculous clause means no restraint at all
• Employers still should not draft absurdly wide terms hoping courts will trim them
• Well-drafted restraints use cascading alternatives, offering several shorter and narrower options so at least one tier survives scrutiny
• Urgent cases often turn on injunctions, where the court decides quickly whether to preserve the status quo until trial

Sale-of-business restraints are a different animal

Restraints given by someone selling their business attract far more lenient treatment than employee restraints. A vendor who has just received full value for goodwill has sold exactly that: the right to be free of their own competition. Courts accordingly allow vendors wider restraints in duration and geography, because the buyer paid for protection and the vendor chose to sell. Employees, by contrast, are treated as needing protection from unequal bargaining power.

This distinction matters for anyone buying or selling a practice, franchise territory or book of clients. If you are buying, insist on robust vendor restraints; if you are selling, expect them and price the restriction into your negotiations.

Garden leave and other alternatives

Not every protective goal needs a restraint clause:

• Garden leave: pay an employee to serve out notice away from clients and systems, keeping relationships warm and information cold
• Confidentiality clauses protecting specific information indefinitely
• Structured handovers moving client relationships deliberately before departure
• Retention bonuses rewarding stay-through-transition periods

Layering these tools usually beats relying on a single blunt non-compete that may not survive scrutiny anyway.

Practical factors that decide real cases

Beyond the wording, context drives outcomes:

• Did the employee actually control client relationships, or just process transactions?
• Is the information claimed confidential genuinely secret, or common industry knowledge?
• What is the realistic shelf life of customer connections in that industry?
• Was anything paid for the restraint? Payment helps but cannot validate an unreasonable clause
• Are there alternative protections, such as garden leave during notice?

Industry practice also colours outcomes. Restraints are routine in some sectors, such as real estate, financial services and medical practices, and courts know departing staff in those fields can move client books wholesale. In industries where customers choose suppliers on price and logistics rather than personal relationships, restraints look thin and often fail. Evidence about why clients actually stay or leave, drawn from emails and account histories, frequently becomes the decisive material in contested hearings.

Advice for each side

Employers: tailor restraints to individual roles, review them periodically, and pair them with strong confidentiality clauses. A restraint is one tool among several, not a substitute for controlling information properly.

Employees: get advice before signing an offer, because post-signature leverage shrinks dramatically. When resigning, plan the move carefully; even where a restraint looks weak, fiduciary and confidentiality duties remain, and missteps during the transition create liability independent of the clause. Never take client lists or files on the way out.

Facing a restraint dispute on either side? Contact Bell & Senior Lawyers for a free initial chat, and see our commercial and litigation practices and contract resources .

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