Many employment agreements provide restraints of trade that apply even if the employee is made redundant. In other words if you sign an agreement that says you will not work in the same industry for 3 months after your employment terminates this applies even if you are made redundant. Now this doesn’t seem fair to me but if you sign it then there is not a lot that can be done.
I always advise my clients not to sign a restraint of trade clause that includes the restraint of trade clause being enforceable in the event of redundancy (unless they really really really want the job). At the very least I suggest that try and negotiate a change in the employment agreement. Generally (subject to the Restraint being reasonable) if you sign it, you are stuck with it. Get advice.
Onerous provisions in employment agreements may not be enforceable
An employer had a clause in its Employee Handbook stating that if an employee left the job without giving notice, they would have to pay 4 weeks’ wages as compensation to the employer. In my view this sort of provision should be in the Employment Agreement even if the Agreement refers to the handbook and incorporates it.
Ms W was employed in July 2008. In early August, she missed 3 shifts in a row without explanation. The employer wrote to Ms W, saying if she did not respond within 7 days, she would be treated as having abandoned her employment. Ms W did not respond. There was no evidence that she actually received the letter. The employer held back her final pay of $170 and claimed $1,180 from her as compensation under the clause in the Handbook.
The Employment Relations Authority held the clause was unconscionable and could not be enforced because (1) there was no evidence that the employer had drawn it to W’s attention, (2) in the circumstances, the employer had actually ended the employment relationship, not Ms W, and (3) in a claim for breach of contract, the party who has been wronged cannot recover an amount that is out of proportion with the loss they have incurred. The Authority allowed the employer to keep the $170 as compensation but refused to order W to pay the rest of the claim.
