Are employee non-competes enforceable in Tasmania?
Only so far as they are reasonable. A post-employment non-compete is treated as a restraint of trade, which the common law presumes is unenforceable unless the employer shows it goes no further than is reasonably necessary to protect a legitimate business interest. The Supreme Court of Tasmania has stated the test in orthodox terms: to be reasonable, a covenant must afford no more than adequate protection to the party in whose favour it is imposed, judged at the time the covenant was entered into . The onus of justifying the restraint sits on the employer .
Tasmania is not a per se ban jurisdiction, and it has no statute that sets fixed numeric limits on duration or area or that empowers a court to read an overbroad restraint down. It is a reasonableness jurisdiction built entirely on the common-law restraint-of-trade doctrine. The local case law is comparatively thin: two Supreme Court of Tasmania decisions — Neville Jeffress Advertising Pty Ltd v Barlow (No 2) and Bulk Frozen Foods Pty Ltd v Excell — carry most of the weight, supplemented by the High Court of Australia restraint-of-trade authorities that bind Tasmanian courts. The Supreme Court has adopted the High Court's statement of why the doctrine exists:
Courts apply the doctrine more strictly to employment covenants than to covenants given on the sale of a business, a distinction the High Court drew in Lindner v Murdock's Garage and the Tasmanian decisions follow. The sections below work through whether a court can narrow an overbroad clause, how cascading clauses fared in the leading Tasmanian decision, what counts as a legitimate interest, how reasonableness of scope is judged, and the open question of whether a breach can extend the restraint.
Sources for this answer
Case law · 1993-10-15
A.1 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)To be reasonable, a restraint must afford no more than adequate protection to the party in whose favour it is imposed, judged at the time the covenant was entered into.
In considering the primary question as to whether or not the covenant is reasonable as between the parties, two propositions are fundamental, namely that in order to be regarded as reasonable the covenant must afford no more than adequate protection to the party in whose favour it is imposed (Herbert Morris Ltd v Saxelby (supra) at 707) as judged at the time the covenant was entered into (Lindner v Murdock's Garage [1950] HCA 48 ; (1950) 83 CLR 628 at 653; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 318).
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J), citing Herbert Morris Ltd v Saxelby [1916] 1 AC 688 and Lindner v Murdock's Garage (1950) 83 CLR 628.
Case law · 1950-09-29
A.2 Lindner v Murdock's GaragePDFThe employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable.
The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 1993-10-15
A.3 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)Unreasonable restraints are unenforceable because it is contrary to the public welfare that a person be unreasonably prevented from earning a living and that the public be deprived of that person's services.
The law treats unreasonable restraints as unenforceable because it is contrary to the public welfare that a man should unreasonably be prevented from earning his living in whatever lawful way he chooses and that the public should unreasonably be deprived of the services of a man prepared to engage in employment.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J), quoting Buckley v Tutty (1971) 125 CLR 353.
Can a Tasmanian court narrow an overbroad non-compete?
Only in a limited way, and far less generously than many employers assume. Tasmania has no statute that lets a court read an overbroad restraint down to a reasonable level. What a court can do is sever — that is, delete — covenants that the parties themselves drafted as genuinely separate, where what is covenanted is substantially equivalent to a number of separate covenants . It cannot read down, add to, or rewrite the clause. In the leading Tasmanian decision, the court held a multi-part covenant valid only for one of its severable parts and invalid for the rest .
The severance anchor in Tasmania is Neville Jeffress Advertising Pty Ltd v Barlow (No 2). The covenant there was given on the sale of an advertising agency coupled with the covenantor's employment by the purchaser; it barred the covenantor, for three years after his employment ended, from conducting advertising business with the purchased client list, with the purchaser's other existing clients, and with anyone who became a client during his employment. Zeeman J held that the parts of the covenant reaching beyond the purchased client connection went too far — but that the clause did not fail as a whole, because the parties had drafted it as a set of separate promises:
Zeeman J described the familiar blue-pencil label as misleading, and located the real question in the parties' own drafting: severance is possible where the covenant is expressed in terms which amount to a clear severance by the parties themselves, so that what is covenanted is substantially equivalent to a number of separate covenants . The exercise remains deletion, not rewriting — the severed parts must be independent of one another, the deletion must not change the meaning of what remains, and what is cut away must not be the main substance of the agreement. Applying that approach, the covenant survived only insofar as it protected the purchased client connection, and the injunction granted was confined accordingly .
Because a Tasmanian court will not read an overbroad restraint down to a reasonable level — severance works only where the parties' own drafting amounts to a clear severance into genuinely separate covenants — draft scope, area, and duration to the minimum the legitimate interest actually requires. Build the clause from separate, independently severable covenants rather than one sweeping prohibition, so that if the widest covenant is unreasonable a narrower one can still stand on its own .
Sources for this answer
Case law · 1993-10-15
B.1 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)The blue-pencil label is misleading; severance is possible where the covenant is expressed in terms amounting to a clear severance by the parties themselves, so that what is covenanted is substantially equivalent to a number of separate covenants.
The "blue pencil test" is misleading. Where a covenant is expressed in terms which amount to a clear severance by the parties themselves, so that what is covenanted substantially is equivalent to a number of separate covenants, severance is possible (S V Nevanas and Co v Walker (1914) 1 Ch 413 at 423; Attwood v Lamont (1920) 3 KB 571 at 578).
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 1993-10-15
B.3 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)An overbroad covenant does not necessarily fail in its entirety; where it contains separate severable covenants, the unreasonable ones can be cut away and the reasonable ones enforced.
It does not follow that the covenant fails in toto. The six separate provisions contained within the covenant which earlier I have identified each is a separate severable covenant.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 1993-10-15
B.2 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)After severance, the covenant was held valid only insofar as it protected the purchased client connection, and invalid as to the wider categories of clients.
I hold that severance is possible. Insofar as the Clients are concerned, but not otherwise, the covenant is valid in respect of the period of three years from the date of the termination of the employment of the defendant.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Are cascading or ladder restraint clauses valid in Tasmania?
Yes, within limits — and the leading Tasmanian decision tested the device at an extreme. In Bulk Frozen Foods Pty Ltd v Excell, the restraint combined seven capacities, fifteen activities, thirteen areas, and six periods, each combination expressed as an independent severable covenant, producing 8,190 separate covenants . Blow CJ held the clause was not void for uncertainty, treating it as a genuine attempt to define the employer's need for protection rather than an exercise in leaving the court to make the parties' contract for them .
The case concerned the general manager of a food wholesaler's southern Tasmanian operations, who resigned to join a competitor. The employer sued for a declaration that the restraint was valid, an injunction, and delivery up of its property; the action went to trial on affidavit, and at the start of the trial Blow CJ was asked to determine, as a preliminary issue, whether the restraint clause was void. The clause was a cascade in every dimension: Item 8 of the schedule stacked six alternative periods of one to six months, and the area limb layered three telephone districts over fall-back radii around five post offices . The arithmetic was put by senior counsel for the defendant, and the Chief Justice recorded it without quarrel:
The outcome matters as much as the arithmetic. The point of the structure is that the clause stands or falls covenant by covenant: because each combination was an independent severable covenant, the clause was not void if any one of the 8,190 covenants was reasonable . Blow CJ determined that the clause was not void for uncertainty and not wholly void for unreasonableness, while expressly leaving open whether some of the individual covenants were too wide . The determination resolved only that preliminary validity issue — no injunction was granted at that stage, and it was not a final ruling that every rung of the ladder could be enforced.
A cascading clause is the practical answer to the absence of any read-down power in Tasmania, but the protection is conditional. The structure was upheld in Bulk Frozen Foods Pty Ltd v Excell because it was a genuine attempt to define the employer's need for protection, with severance agreed as a precaution — the reasoning Blow CJ adopted warns that the more numerous and mechanical the combinations, the more the exercise looks like leaving the court to make the parties' contract for them. Keep each rung a self-contained, plausibly reasonable covenant, and remember that surviving a validity attack still leaves each rung open to challenge as too wide .
Sources for this answer
Case law · 2014-11-03
C.1 Bulk Frozen Foods Pty Ltd v ExcellA cascading restraint combining seven capacities, fifteen activities, thirteen areas, and six periods produced 8,190 separate covenants, each expressed as an independent severable restraint.
The result, as pointed out by senior counsel for the defendant, is that the parties entered into not one covenant, but 8,190 separate covenants. That figure is calculated by multiplying together the number of specified capacities (7), the number of specified businesses or activities (15), the number of specified areas (13), and the number of periods (6): 7 x 15 x 13 x 6 = 8,190.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), recording a submission of senior counsel for the defendant.
Case law · 2014-11-03
C.2 Bulk Frozen Foods Pty Ltd v ExcellDespite the very large number of combinations, the clause was regarded as a genuine attempt to define the covenantee's need for protection, with severance agreed as a precaution against the all-or-nothing nature of the reasonableness tests.
Although the result is a very large number of combinations, I think the clause should be regarded as, in the words of Spender J, "a genuine attempt to define the covenantee's need for protection, with the agreement as to severance as a precaution against the 'all or nothing' nature of the court's tests for reasonableness".
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), quoting Spender J in Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505.
Case law · 2014-11-03
C.3 Bulk Frozen Foods Pty Ltd v ExcellThe contract cascaded both time and area: the schedule provided a cascading series of time restraints, and the area limb split Tasmania into telephone districts with fall-back radii around five post offices.
Because of that willingness, Item 8 in the schedule to the contract made provision for a cascading series of time restraints. And cl 8.2(b)(C) split Tasmania into three telephone districts, added fall-back provisions relating to areas within 100 kilometres of five different post offices, and added further fall-back provisions relating to areas within 50 kilometres of the same five post offices.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ).
Case law · 2014-11-03
C.4 Bulk Frozen Foods Pty Ltd v ExcellBecause each combination was an independent severable covenant, the clause was not void if any one of the 8,190 covenants was reasonable.
It followed that cl 8.2(b) is not void if any one of the 8,190 severable covenants was reasonable.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ).
Case law · 2014-11-03
C.5 Bulk Frozen Foods Pty Ltd v ExcellOn the preliminary issue, the clause was determined to be not void for uncertainty and not wholly void for unreasonableness, with the question whether some of the individual covenants were too wide expressly left open.
On 30 October 2014 I determined that the clause was not void for uncertainty, and was not wholly void for unreasonableness. I left open the question whether some of the covenants embodied in that clause were void for unreasonableness.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ).
What legitimate interest must an employer show to enforce a Tasmanian non-compete?
A protectable business interest — not a mere wish to avoid competition. An employer cannot restrain a former employee simply because a rival might benefit; an employer must be prepared to face the competition of a former employee if it comes . The Supreme Court of Tasmania has put the requirement in property terms: a restraint of trade is only valid if the covenantee has some property or interest that can be protected, such as confidential information or trade secrets .
The dividing line drawn in Lindner v Murdock's Garage is between protecting an asset and suppressing a rival. A covenant aimed at competition by itself, rather than at a recognised interest, is invalid .
“An employer must be prepared to face the competition of a former employee if it comes.”
Bulk Frozen Foods Pty Ltd v Excell shows what a sufficient interest looks like in practice. The departing general manager had been routinely supplied with information about the employer's customers, the products and quantities they bought, the prices they paid, profit margins, and supplier pricing across all of the company's food service branches, and Blow CJ was satisfied that the plaintiff had confidential information that could reasonably be protected by a restraint of trade provision in a contract of employment . The flip side is equally settled: the general skill and knowledge a person acquires in their work is not property and will not be protected . Zeeman J adopted the same principle in the Privy Council's formulation — the employee is entitled to use to the full any personal skill or experience even if acquired in the employer's service, and the employer's claim must rest on some advantage or asset inherent in the business that can fairly be regarded as its property .
A clause that simply bars a former employee from joining or starting a competing business, without tying the restraint to a specific protectable interest, is the weakest position, because an employer is not entitled to protection against competition as such . Identify the actual interest — the customer connection, the goodwill, or the confidential information — and be ready to prove it with the kind of concrete evidence of customer, pricing, and margin information that carried the day in Bulk Frozen Foods Pty Ltd v Excell .
Sources for this answer
Case law · 1950-09-29
D.1 Lindner v Murdock's GaragePDFAn employer has no protectable interest in freedom from competition by a former employee as such and must be prepared to face that competition; only a recognised interest can support a restraint.
An employer must be prepared to face the competition of a former employee if it comes.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 2014-11-03
D.2 Bulk Frozen Foods Pty Ltd v ExcellA restraint of trade is only valid if the covenantee has some property or interest that can be protected, such as confidential information or trade secrets.
A restraint of trade will only be valid if the covenantee has some property or interest that can be protected, such as confidential information or trade secrets: Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd [1919] HCA 18 ; (1919) 26 CLR 410 at 440-441; KA & C Smith Pty Ltd v Ward (1998) 45 NSWLR 702 at 723.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), citing Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd (1919) 26 CLR 410.
Case law · 2014-11-03
D.3 Bulk Frozen Foods Pty Ltd v ExcellOn the evidence of customer, pricing, and margin information routinely supplied to the manager, the employer had confidential information that could reasonably be protected by a restraint of trade in an employment contract.
I was satisfied that the plaintiff had confidential information that could reasonably be protected by a restraint of trade provision in a contract of employment.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ).
Case law · 2014-11-03
D.4 Bulk Frozen Foods Pty Ltd v ExcellThe general skill and knowledge a person acquires in their work does not amount to property and will not be protected by a restraint.
The general skill and knowledge that a person acquires in his or her work does not amount to property and will not be protected: Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 711; Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd (above) at 441.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), citing Herbert Morris Ltd v Saxelby [1916] 1 AC 688.
Case law · 1993-10-15
D.5 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)An employer is not entitled to protection from mere competition; the former employee may use personal skill and experience to the full, and the employer's claim must rest on an advantage or asset inherent in the business that is in a general sense its property.
The accepted proposition that an employer is not entitled to protection from mere competition by a former employee means that the employee is entitled to use to the full any personal skill or experience even if this has been acquired in the service of his employer: it is this freedom to use to the full a man's improving ability and talents which lies at the root of the policy of the law regarding this type of restraint.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J), quoting Stenhouse Australia Ltd v Phillips [1974] AC 391.
How long and how wide can a Tasmanian non-compete be?
There is no statutory limit; reasonableness is decided case by case on the activity restrained, the geographic area, the duration, and the employee's seniority and access to protectable information. Reasonableness is judged by reference to the circumstances at the time of the contract, not by hindsight . A geographic area wider than the employer's business reasonably requires is likely to be fatal .
Because the limits are judge-made, the analysis cuts both ways, and the decisions discussed in this note illustrate each direction. In Lindner v Murdock's Garage the High Court held an area covenant void because the area it covered was wider than the employer's business reasonably required . In Neville Jeffress Advertising Pty Ltd v Barlow (No 2), the parts of a three-year covenant that reached clients with no real connection to what the employer was protecting were struck down as an attempt to suppress competition itself — although the three-year restraint over the purchased client list survived, in circumstances the court treated as closer to a sale of goodwill than ordinary employment.
At the other end of the scale, Bulk Frozen Foods Pty Ltd v Excell tested the validity of the cascading clause by taking one of its least onerous rungs — one month, within 50 kilometres of Hobart, as a manager in wholesale frozen-food sales — and asking whether that covenant was reasonable:
There is no Tasmanian decision fixing an outer numeric ceiling, and the honest position is that the local data points are few: a one-month, 50-kilometre covenant treated as plainly reasonable on strong confidential-information facts, a statewide cascade of up to six months held not wholly void with the width of its individual rungs left open , and a three-year restraint enforceable only as protection for purchased goodwill. Longer and wider restraints demand a correspondingly stronger interest, and the employer carries the burden throughout.
Sources for this answer
Case law · 2014-11-03
E.1 Bulk Frozen Foods Pty Ltd v ExcellThe reasonableness of a restraint of trade is judged by reference to the circumstances at the time of the contract, not with hindsight.
The reasonableness or otherwise of a restraint of trade must be judged by reference to the circumstances at the time of the contract: Lindner v Murdock's Garage [1950] HCA 48 ; (1950) 83 CLR 628 at 653.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), citing Lindner v Murdock's Garage (1950) 83 CLR 628.
Case law · 1950-09-29
E.2 Lindner v Murdock's GaragePDFA restraint whose geographic area is wider than reasonably necessary to protect the employer's business is unreasonable and void; here the area covered was held unreasonably wide.
I think it must be held that the area was unreasonably wide.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Case law · 1993-10-15
E.3 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)The parts of the covenant reaching beyond any genuine customer connection operated merely to protect the employer from competition, which the law does not regard as reasonable.
The covenant goes much further and operates so as to merely protect the plaintiff from competition in circumstances where the law does not regard that as reasonable.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 2014-11-03
E.4 Bulk Frozen Foods Pty Ltd v ExcellTested against one of the least onerous rungs of the cascade — one month within 50 kilometres of Hobart — the covenant could only be regarded as reasonable on the evidence of the employer's business, confidential information, and competitors.
Having regard to the evidence as to the plaintiff's business, the nature of the confidential information provided to the defendant, and the plaintiff's competitors, that covenant could only be regarded as reasonable.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ).
Do paid restraints, garden leave, and fresh consideration help in Tasmania?
They can strengthen an employer's position, but they do not displace the reasonableness requirement, and no Tasmanian decision squarely addresses garden leave or a paid post-employment restraint. The closest local guidance is the principle that what was paid for a restraint counts in assessing it: where a restraint enhances the price a covenantor receives, that enhanced price is a factor to be taken into account in judging reasonableness — and it is a factor which is absent in the ordinary employment case .
That reasoning comes from the vendor-goodwill context, where the covenantor was paid for accepting the restraint, but the logic carries over by analogy: a restraint the employee was specifically and substantially compensated to accept gives the employer something concrete to point to when discharging its onus, whereas a bare covenant in a standard employment contract has no such support . Garden leave — keeping the employee employed and paid through a notice period — has not been tested as a restraint device in the Tasmanian authorities discussed here, so it should be assumed to face the same reasonableness framework as any other restriction, with the continuing salary weighing in favour of enforcement rather than guaranteeing it.
For mid-employment restraints — covenants introduced after the employee is already on foot — the practical concern is that reasonableness is judged by reference to the circumstances at the time of the contract , so a restraint added later is judged on the circumstances then, not on the original hiring, and needs its own consideration.
Sources for this answer
Case law · 1993-10-15
F.1 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)The enhanced price obtained for accepting a restraint is a factor in judging its reasonableness, and that factor is absent in the ordinary employment case, where the employer is not entitled to protection from mere competition.
The obtaining of the enhanced price is a factor to be taken into account in judging the reasonableness of the restraint. It is a factor which is absent in the case of an employment contract where in general terms a former employer is not entitled to protect himself from mere competition from the former employee.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 2014-11-03
F.2 Bulk Frozen Foods Pty Ltd v ExcellReasonableness is judged at the time of the contract, which governs how a restraint introduced mid-employment is assessed.
The reasonableness or otherwise of a restraint of trade must be judged by reference to the circumstances at the time of the contract: Lindner v Murdock's Garage [1950] HCA 48 ; (1950) 83 CLR 628 at 653.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), citing Lindner v Murdock's Garage (1950) 83 CLR 628.
What if the employer wrongfully dismissed the employee?
The restraint may fall away, and this is one question on which there is direct Tasmanian authority. In Neville Jeffress Advertising Pty Ltd v Barlow (No 2) the dismissed covenantor argued that termination without proper notice discharged him from the covenant. Zeeman J analysed the argument on its own terms — asking whether the employer's conduct amounted to a repudiation of the contract that would discharge the covenantor — and rejected it only on the facts, holding that immediate termination coupled with a month's pay in lieu was a quite insignificant breach . The employer also bears the onus of proving the restraint reasonable in the first place .
The decision shows both the door and its limits. The discharge argument failed because the breach, if there was one, was trivial — the employee was paid exactly what a month's notice would have given him and was not even excluded from the premises — not because the doctrine was unavailable:
The implication is that a more serious employer breach — a repudiatory termination not cured by proper payment — could discharge the covenantor, although none of the Tasmanian authorities discussed here has yet held a restraint unenforceable on that ground. Zeeman J also preferred the view that a dismissal with money in lieu of notice operates, as a matter of law, as damages for breach of contract rather than as performance , which is why the character and adequacy of the termination payment mattered so much to the analysis.
The employer already bears the onus of proving the restraint reasonable before any question of its own breach arises . On top of that, an employer that terminates abruptly should make sure the termination itself complies with the contract and any required notice: the discharge-by-breach argument failed in Neville Jeffress Advertising Pty Ltd v Barlow (No 2) only because the breach was insignificant and fully compensated , and a court could treat a more serious repudiation differently. Confirm that notice or payment in lieu was properly handled before suing to enforce a covenant.
Sources for this answer
Case law · 1993-10-15
G.4 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)Whether or not the employer breached the contract, the circumstances and nature of the breach were not such as to amount to a repudiation discharging the covenantor from the covenant.
Nevertheless I do not consider it necessary to come to any final conclusion about this aspect of the matter because, whether or not the plaintiff was in breach of contract, the circumstances and nature of the breach (if it was a breach) were such as not to amount to a repudiation of the contract in circumstances where the defendant was discharged from the covenant.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 1993-10-15
G.1 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)Immediate termination coupled with payment of the salary the employee would have earned over the one-month notice period was a quite insignificant breach, insufficient to discharge the covenant.
Secondly, as it was a term of the defendant's employment that he could be terminated on one month's notice, immediate termination coupled with the payment of the salary to which he would have been entitled in respect of that period of one month is a quite insignificant breach (see Spencer v Marchington (1988) IRLR 392 at 395).
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 1993-10-15
G.3 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)A dismissal without notice but with money in lieu operates in law as damages for breach of contract, an approach Zeeman J preferred in analysing whether the termination breached the contract.
If a man is dismissed without notice but with money in lieu, what he receives is, as a matter of law, damages for breach of contract.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J), quoting Sir John Donaldson in Dixon v Stenor Ltd (1973) IRLR 28.
Case law · 1950-09-29
G.2 Lindner v Murdock's GaragePDFThe employer bears the onus of proving circumstances showing the restriction on the employee's freedom to work is reasonable.
The onus was on the plaintiff firm to prove circumstances showing that the restriction on the defendant's freedom to work was reasonable.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per McTiernan J).
Does a Tasmanian non-compete pause or extend if the employee breaches?
This is an open question, and an employer should not assume the clock stops. No settled Tasmanian authority holds that a restraint period tolls — pauses and then resumes — while a former employee is in breach or while litigation runs. Reasonableness is judged by reference to the circumstances at the time of the contract , which sits uneasily with a clause that purports to lengthen the restraint automatically depending on the employee's later conduct.
Because validity is fixed at the date of contract, a drafting device that extends the period by the length of any breach pushes the effective duration beyond what was assessed as reasonable at the outset, and there is no Tasmanian authority validating it. Australian courts tend to treat rolling or indefinite restraints with suspicion and to prefer addressing a breach through a tailored injunction or damages rather than by extending the restraint period. The safer assumption is that the stated period is the maximum the employer can rely on.
Do not rely on a clause that purports to extend the non-compete by the length of any breach. No Tasmanian authority validates tolling of the restraint period, and because reasonableness is judged at the time of the contract, an automatic extension risks being treated as unreasonable . Treat the stated duration as the maximum and address an actual breach through an injunction or a damages claim instead.
Sources for this answer
Case law · 2014-11-03
H.1 Bulk Frozen Foods Pty Ltd v ExcellReasonableness is judged by reference to the circumstances at the time of the contract, which is in tension with a clause that automatically extends the restraint based on the employee's later breach.
The reasonableness or otherwise of a restraint of trade must be judged by reference to the circumstances at the time of the contract: Lindner v Murdock's Garage [1950] HCA 48 ; (1950) 83 CLR 628 at 653.
See Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58 (Blow CJ), citing Lindner v Murdock's Garage (1950) 83 CLR 628.
Do Tasmanian restraint rules differ for contractors and business sales?
Yes, in different directions. Restraints on independent contractors are assessed under the same restraint-of-trade doctrine as employee covenants — the same legitimate-interest requirement and the same no-wider-than-necessary test — so the label of the relationship matters less than the substance of the interest the restraint actually protects. Restraints given by the seller of a business, by contrast, are judged more leniently, because a buyer is entitled to protect the goodwill it paid for .
The sale-of-business leniency is long-standing and uncontroversial — it predates Lindner v Murdock's Garage and has never been in doubt, so the way the point is expressed in that case (in a judgment that dissented on the ultimate outcome) reflects settled doctrine rather than any minority view. A restraint in a sale agreement is more easily upheld than the same restraint in an employment contract , and the Supreme Court of Tasmania has explained the policy behind the line: accepting the restraint enhances the price the vendor receives for the business, a justification that has no counterpart in an ordinary employment relationship .
Neville Jeffress Advertising Pty Ltd v Barlow (No 2) shows how the line is drawn in substance rather than form. The covenant sat inside a deed that both sold an agency's goodwill and employed its principal, and Zeeman J held that, for the purchased client list, it was appropriate to treat the covenantor as the vendor of the goodwill because his company was in effect his alter ego — that part of the covenant was upheld on the more lenient standard, while the parts protecting only future custom were tested as employment restraints and failed. For contractors, the same substance-first logic applies: the question is whether there is a legitimate interest and whether the scope is no wider than necessary to protect it.
Sources for this answer
Case law · 1950-09-29
I.1 Lindner v Murdock's GaragePDFA distinction is drawn between a restraint in a sale-of-business agreement and a restraint in an employment agreement, with the former treated more favourably.
A distinction is drawn between a restraint upon trade included in an agreement for the sale of a business and a restraint included in an agreement with an employee.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ, dissenting as to the outcome).
Case law · 1950-09-29
I.2 Lindner v Murdock's GaragePDFA restraint is more easily upheld in the sale-of-business context than in the employment context.
The restraint is more easily upheld in the former than in the latter case.
See Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 (per Latham CJ, dissenting as to the outcome).
Case law · 1993-10-15
I.3 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)The less stringent approach to sale-of-goodwill restraints is justified because the restraint enhances the price the vendor can obtain for the business, a factor absent from employment contracts.
The justification for taking a less stringent approach in the case of the sale of the goodwill of a business than in the case of an employment contract is that in the former case the imposition and acceptance of the restraint enhances the price which the vendor can obtain for his business.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Case law · 1993-10-15
I.4 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)For the portion of the covenant protecting the purchased client list, the covenantor was treated as the vendor of the goodwill because the vendor company was in effect his alter ego, attracting the more lenient sale-of-business standard.
Insofar as the covenant relates to the Clients, it is appropriate to treat the defendant as if he were the vendor of the goodwill of the business sold by Barlow Advertising Pty Ltd to the plaintiff because, in effect, that company was the alter ego of the defendant.
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J).
Is a federal ban on non-competes coming to Australia?
A ban has been proposed but is not yet law, and as of June 2026 the common-law restraint-of-trade framework above still governs in Tasmania . According to Australian Government Treasury material and law-firm commentary, the Government announced in the 2025–26 Federal Budget that it intends to ban post-employment non-competes for workers earning under the Fair Work Act high-income threshold (reported at around AUD $183,100), with Treasury running a consultation on the design, and the reform expected to be legislated during 2026 and to take effect from 2027, operating prospectively. Those figures and dates come from that secondary material — Treasury announcements and commentary — not from any enacted statute. Until any ban is enacted, the existing common-law framework continues to govern .
The proposal, as described in current Treasury material and law-firm commentary rather than in any enacted statute, would cover most employees earning below the high-income threshold while excluding sale-of-business covenants and restraints on higher earners. Non-solicitation, no-poach, and wage-fixing arrangements are also reported to be under consideration. None of this is in force, and the precise scope, threshold, and commencement could change before any legislation passes; the threshold figure and the 2026/2027 timeline in particular are drawn from secondary reporting and should be re-checked against the enacted text when it appears.
Because this is a future legislative matter, employers should treat the timeline and detail as provisional rather than settled. A covenant entered into now is governed by existing Tasmanian law; whether and how a future ban would affect existing or new agreements will depend on the enacted text and its transitional provisions.
Do not draft to a federal ban that does not yet exist. As of June 2026 no Commonwealth statute bans employee non-competes, so enforceability in Tasmania still turns on the common-law reasonableness test and the deletion-only severance rule . Track the proposal through to enacted legislation before changing practice, because its threshold, scope, and commencement remain proposals subject to change.
Sources for this answer
Case law · 1993-10-15
J.1 Neville Jeffress Advertising Pty Ltd v Barlow (No 2)Under the common-law restraint-of-trade doctrine that currently governs in Tasmania, a covenant is reasonable only if it affords no more than adequate protection to the party in whose favour it is imposed, judged at the time it was entered into.
In considering the primary question as to whether or not the covenant is reasonable as between the parties, two propositions are fundamental, namely that in order to be regarded as reasonable the covenant must afford no more than adequate protection to the party in whose favour it is imposed (Herbert Morris Ltd v Saxelby (supra) at 707) as judged at the time the covenant was entered into (Lindner v Murdock's Garage [1950] HCA 48 ; (1950) 83 CLR 628 at 653; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 318).
See Neville Jeffress Advertising Pty Ltd v Barlow (No 2) [1993] TASSC 113 (Zeeman J), citing Herbert Morris Ltd v Saxelby [1916] 1 AC 688 and Lindner v Murdock's Garage (1950) 83 CLR 628.