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Unfair Dismissal and Restraint of Trade Clause

Employment and Discrimination Law

Unfair Dismissal and Restraint of Trade Clause

Postby Millbrook2 » Thu May 11, 2017 11:20 am

If an employee has a restraint of trade clause in their contract and is found by an IT to have been unfairly dismissed does that automatically negate the restraint of trade clause because of a breach of contract.

If not automatically then would it on the balance of probabilities.

Any case law as well as opinion would be gratefully received.
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Re: Unfair Dismissal and Restraint of Trade Clause

Postby atticus » Thu May 11, 2017 12:51 pm

Unfair dismissal is not automatically a breach of contract - the circumstances may amount to one.

Generally, it is correct that a fundamental breach of contract by an employer in dismissing an employee renders restrictive covenants unenforceable. However, this is a complicated area of law. Much will depend on the circumstances of the case.
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Re: Unfair Dismissal and Restraint of Trade Clause

Postby dls » Thu May 11, 2017 12:55 pm

Not necessarily.

It may vary with the words used - such clauses vary greatly. There is a lot of litigation on these things because the situations do vary widely, and the results are specific to each case. Restraint of trade clauses will readily be thrown out if not well worded. Typically they fail for greed in the employer.

If the employee succeeds in his claim, and would suffer losses if the clause applied, will it not have been factored into the damages - in which case the employer might well insist on what they have paid for.
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Re: Unfair Dismissal and Restraint of Trade Clause

Postby Millbrook2 » Thu May 11, 2017 1:05 pm

Thanks for the replies.

I like the aspect of it being factored into the damages - I hadn't thought of that.

If it were so then it would be helpful in negotiating a settlement - either pay up to keep it in or pay less and do away with it. That's very useful.
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