How does a Restraint of Trade Affect My Career

Many employers use a Restraint of Trade to preserve the trusted fundamental resources of a business. Whether it is an invaluable database of clients or a secret strategy that wow's competitors, a 'secret recipe' or 'trade secret' unbeknown to anyone but those belonging to the 'family'. A restraint of trade ensures that those savvy to a company's unique differentiator does not leak classified company information to the public or competitors.

Any owner of a company has the right to maintain their own unique trade secrets, but what about the employees? While an MD of a company has a long term vested interest in his or her company, employees come and go as their career paths grow and evolve. As do entrepreneurs, they too have the right to freedom of trade, so how far can an employer push the restraint of trade line and what exactly is a restraint of trade? How would you know if a restraint of trade affects my current occupation? In what manner does a restraint of trade inhibit my employment rights? These are all questions that every employee should know how to answer. A restraint of trade could have severe repercussions on your career action plan and chances of pursuing a possible career change. Let Jobs.co.za answer all of your questions regarding a restraint of trade.

What Is a Restraint of Trade?

A restraint of trade is usually a clause added to an employment contract that pertains to restrictions applied to your unique trade or occupation with the interests of maintaining confidential business secrets. A restraint of trade may be enforced by your employer. By placing certain limitations on your freedom of employment, you may or may not be able to trade within the same industry you currently work in should you resign. This secures the safety and confidentiality of trade secrets and sensitive business information relating to the company. Such information is viewed as being of a classified nature and should this leak to competitors could have severe trade repercussions.

Does a Restraint of Trade Apply To me?

Many company advisors or legal consultants recommend restraints of trade when a product offering is remarkably unique. By protecting unique company assets, companies maintain exclusive rights to their trade secrets. Usually a restraint of trade is documented in a detailed format in individual employment contracts. Restraints of trades are not a pre-described feature in a  standard employment contract and thus are an additional clause added to unique employment agreements.

As this is an addition to a contract it is considered that a restraint of trade to be above and beyond an employee's call of duty. An employee is required to agree to that which is stated in the employment contract in order to accept the propositioned role. Although you might not agree, it will be to your benefit to be aware of these restrictions before accepting a role. If you aren't sure if you are bound by a restraint of trade, go through your employment contract as it is here where this will be documented.

How Can a Restraint of Trade Affect my Job?

Each company that decides to include a restraint of trade in their employment contracts will have unique inclusions in their restrains. While this is so it is safe to say that a restraint of trade will impact your employment agreement in one of the following ways.

A restraint of trade could firstly impact your employment and your career in the sense of who you do business with during your employment term. Whether you are on contract or a permanent employee, if you are restricted by a restraint of trade you cannot do business with anyone else. A restraint of trade typically limits employees from making use of 'company resources' for personal gain. An employee's unique skills are considered to be 'company resources' and it are these that you are not entitled to utilise for the benefit of anyone else other that your current employer. In other words, you cannot partition any moonlighting work or free lance work whilst employed with the organisation with a restraint of trade in place.

Not only does a restraint of trade limit you during your employment term but also plays a part when wanting to terminate your employment. The most common feature of a restraint of trade is to limit an employee after they leave the company. This means that an employee restricted by a restraint of trade is able to resign from a position, but may not continue to work for a similar company that competes directly or indirectly with the company once you have resigned from the company.  A restraint of trade therefore effectively 'banns' an employee from working in a similar firm and /or industry to the one directly relating to their current job. This restraint would apply for a specific time period detailed in the employment contract and usually specifies a geographical range in which these restrictions may reasonably be enforced on the employee by the employer.

While to some, a restraint of trade may not necessarily bother you, it is your responsibility to be aware of what restraints are in place. Although not bothered, not very many employees are able to boast a multitude of skills applying to various different markets and industries. To many a restraint of trade could mean their entire livelihood although it may become very difficult for an employer to enforce a restraint of trade in the instance where any employee is unable to make a living from an alternative field of work due to limited skills. However, restraints of trade are certainly worth paying attention to should they feature in your employment contract as these may have a significant impact on your next career move.

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