SST Consulting Services Pty Ltd v Rieson & Anor

The High Court of Australia considered an appeal from the Supreme Court of New South Wales in a dispute between SST Consulting Services Pty Ltd and the respondents, Mr Rieson and another. The core of the dispute concerned the enforceability of a restraint of trade clause contained within an employment agreement.

The central legal issue before the High Court was whether the restraint of trade clause, which sought to prevent the former employee from engaging in competitive activities for a period of 12 months following termination of employment, was void as being contrary to public policy. This required the Court to assess the reasonableness of the restraint in protecting the legitimate business interests of the employer, considering the scope of the restriction, its duration, and the geographical area it covered.

The High Court ultimately found the restraint of trade clause to be unreasonable and therefore void. The Court reasoned that the employer had failed to demonstrate that the restriction was no wider than necessary to protect its legitimate business interests, such as its confidential information and customer connections. The broad nature of the prohibited activities, coupled with the duration of the restraint, was considered to unduly restrict the employee's ability to earn a livelihood in their chosen profession, thereby contravening public policy. The Court affirmed the established legal principles governing the enforceability of restraints of trade, emphasizing the need for such clauses to be narrowly construed and demonstrably justified.