The answer is – possibly, depending on how well they are drafted.
But first, what is a cascading restraint of trade clause?
These clauses are also sometimes referred to as “step”, “ladder” or “waterfall” clauses.
They offer layered restrictions on post-employment activities, varying by time and location.
They typically combine a set of variables such:
1. The geographic coverage – eg. Australia; Queensland; Brisbane; within 20 kilometers of the employer; within 10 kilometres… etc etc
2. The time the restraint operates – 12 months; 9 months; 6 months; 3 months, etc etc.
These variables are then combined to make a number of separate permutations, for example:
– Australia for 12 months; or
– Queensland for 12 months; or
– Brisbane for 12 months; or
You get the idea!
Their purpose is to enable unenforceable restraint terms to be struck down by a Court without invalidating the entire restraint provision in the contract.
The intention is that if the Court is of the opinion that one or more of the combined restraints are unreasonable and therefore invalid, at least one narrower restriction can be upheld.
Now, whether the restraints are reasonable and therefore valid and enforceable is a topic I covered recently in another post here.
What should employers do? Seek legal advice from an experienced employment lawyer to ensure that your post-employment restraints are valid and enforceable.
What should employees do? Don’t assume those post-employment restraints in your contract of employment are either enforceable or unenforceable. Seek legal advice.
Are cascading restraint clauses in employment contracts valid and enforceable under Australian employment law?
