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​Employers should take steps to protect their business interests by looking at the risk areas of the business, the people who can affect the business’s goodwill, and by drafting employment restraint clauses that clearly delineate the responsibilities of employers and employees, said  Hall & Wilcox employment partner Karl Rozenbergs.

Mr Rozenbergs’ comments follow this week’s NSW Supreme Court hearing in which Channel Seven successfully restrained its former sales director James Warburton from immediately joining the Ten Network, and stopping him from potentially using their commercially sensitive information.

He said the importance of employment restraint contracts are a simple but effective means of limiting future conflicts requiring employees to respect the ‘corporate collateral’ of the company they are leaving.

“These developments have implications for all employers, regardless of the size of the business. If employees are not covered by a restraint they are free to compete immediately upon leaving, perhaps raiding client lists or using confidential information from their previous employ, and the onus is on the previous employer to prove that the information has been used -- an almost impossible task.

“The only way a business can protect itself from malicious employees is to have an effective restraint clause in an employment contract. There are typically two kinds of restraints – commercial and employment. A commercial restraint can restrict competition by new businesses established after the sale of a prior similar business.

“These can be designed to restrict competitive activity as well as contact with previous clients, for two, three or even five years. In those circumstances courts can look at commercial standards and are more likely to enforce those restraints than they would in employment situations.

“Most large companies now include restraints in their employment contracts, but the medium and small business sectors are still slow to move. Rapidly expanding medium size businesses are typically inadequately covered. It is often the case that an employer has to get “bitten” before they act. Financial advisors and planners, insurance brokers, and advertising agencies with account directors are typically the kind of businesses that need protection.”

Mr Rozenbergs said the recent legal stoush between Channels Seven and Ten instigated by Warburton’s move to head the Ten Network highlighted the fact that many companies can rely on restraints to prevent disaffected employees from hurting their business.