Are employee non-competes enforceable in Western Australia?
Only so far as they are reasonable. A post-employment non-compete is treated as a restraint of trade, which the courts presume is void as contrary to public policy unless the employer shows it goes no further than is reasonably necessary to protect a legitimate business interest . The working test is two-sided: the restraint must be necessary for the adequate protection of the employer, while preserving the fullest liberty of action for the former employee consistent with that protection .
Western Australia is not a per se ban jurisdiction, and it has no statute that sets fixed numeric limits on duration or area. It is a reasonableness jurisdiction built entirely on the common-law restraint-of-trade doctrine. The starting point is that every post-employment covenant is presumptively unenforceable, and the burden is on the employer to justify it .
That formulation comes from the Court of Appeal's decision in Smith v Nomad Modular Building Pty Ltd, applying the framework that runs from Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co through the High Court's decision in Lindner v Murdock's Garage . The special circumstances are simply the facts from which reasonableness can be inferred, and the employer must prove them . The sections that follow work through whether a court can narrow an overbroad clause, why cascading clauses matter so much, 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 · 2018-06-15
A.1 Austal Ships Pty Ltd v ClayContracts in restraint of trade are presumed to be contrary to public policy and therefore void, but may be justified by the special circumstances of the particular case.
Although contracts in restraint of trade are presumed to be contrary to public policy and therefore void, they may be justified by the special circumstances of the particular case.
See Austal Ships Pty Ltd v Clay [2018] WASC 178 (Smith AJ).
Case law · 2016-04-11
A.2 Bend-Tech Group (A Firm) v BeekA restraint is reasonable only if it is necessary for the adequate protection of the employer and preserves the fullest liberty of action for the employee consistent with that protection.
A restraint will be reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Case law · 1950-09-29
A.3 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 · 2007-08-13
A.4 Smith v Nomad Modular Building Pty LtdThe Court of Appeal confirmed that covenants restraining an ex-employee from competing with the ex-employer are at common law contrary to public policy and void unless justified by the special circumstances of the case.
Covenants that restrain an ex-employee from competing with the ex-employer are at common law contrary to public policy and void unless it can be justified by the special circumstances of the case.
See Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 (Pullin JA).
Can a Western Australian court narrow an overbroad non-compete?
Only in a limited way, and far less generously than many employers assume. Western Australia has no statute that lets a court read an overbroad restraint down to a reasonable level. A court applies the common-law blue-pencil rule only, and even that is strictly circumscribed : it can delete a genuinely distinct, severable covenant if what remains is reasonable and still makes sense, but it cannot read down, add to, or rewrite the clause . If severance cannot save the clause, the whole restraint fails.
This is the single most important practical point about Western Australian restraint law. Severance is mechanical, not editorial, and it is not enough that the offending words could be neatly struck out with a pencil .
The Supreme Court has shown exactly where the limit bites. In Emeco International Pty Ltd v O'Shea [No 2], a single overbroad defined term ran through several of the restraints, and the Court held that the definition could not be carved up internally to rescue them . Striking words out of a shared definition is not deletion of a separate covenant — it is rewriting every restraint that depends on the definition . And in Bend-Tech Group (A Firm) v Beek, where the employer asked the Court to cure over-reach by severing the unreasonably wide parts, the application failed at the threshold: the employer could not establish even a prima facie case that the restraint clause was valid and enforceable .
Because a Western Australian court will not read an overbroad restraint down to a reasonable level — severance is strictly circumscribed and is not available just because a blue pencil could tidily remove the offending words — draft scope, area, and duration to the minimum the legitimate interest actually requires. Be especially careful with defined terms: breadth buried in a single definition that feeds several restraints cannot be internally severed, and the restraints that depend on it can all fail together .
Sources for this answer
Case law · 2016-04-11
B.1 Bend-Tech Group (A Firm) v BeekThe role of severance for restraint clauses in employment contracts is strictly circumscribed.
The role of severance in the context of restraint clauses in employment contracts is strictly circumscribed.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Case law · 2016-04-11
B.2 Bend-Tech Group (A Firm) v BeekSeverance is not permissible merely because the offending words could be struck out with a blue pencil without changing the meaning of what remains.
Severance is not permissible simply because a blue pencil can be used to remove the offending clause without changing the meaning of the remainder.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Case law · 2012-10-17
B.3 Emeco International Pty Ltd v O'Shea [No 2]A single overbroad defined term incorporated into several restraints cannot be internally severed to save them.
The definition of 'Client' cannot be internally severed in this case.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
Case law · 2012-10-17
B.4 Emeco International Pty Ltd v O'Shea [No 2]Blue-pencilling part of a shared definition would amount to rewriting each restraint that incorporates the definition, which the court will not do.
To 'blue pencil' part of the definition of Client would be to rewrite each of those restraints.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
Case law · 2016-04-11
B.5 Bend-Tech Group (A Firm) v BeekWhere the restraint clause was overbroad, the employer failed at the interlocutory stage to make out even a prima facie case that the clause was valid and enforceable.
Having said that, I have nevertheless reached the conclusion that Bend-Tech has not made out a prima facie case that the restraint clause is valid and enforceable.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Are cascading or ladder restraint clauses valid in Western Australia?
Yes, within limits, and they are essential drafting in Western Australia precisely because a court cannot read an overbroad clause down. A cascading clause sets out progressively narrower combinations of period, area, and activity, each expressed as a separate, severable covenant, so that if the widest is unreasonable a narrower rung can still be enforced on its own. The Supreme Court has accepted that genuinely separate restraint covenants can be severed from one another at common law .
The doctrinal foundation is the classic statement from Attwood v Lamont, which Western Australian courts continue to apply: severance works only where the clause is in truth a bundle of distinct covenants rather than a single covenant .
Emeco International Pty Ltd v O'Shea [No 2] shows the structure working as designed. The contract contained a competitor restraint, a non-solicitation restraint, and client restraints as separate covenants, and the Court accepted that the competitor restraint could be severed from the others because they really were separate covenants . The result was a split outcome: the competitor restraint was enforced while the other restraints fell . Austal Ships Pty Ltd v Clay makes the same point at the interlocutory stage: the Court assessed each limb of the restraint clause separately, was not persuaded that the customer and employee non-solicitation limbs raised a prima facie case, and granted interim relief on the strength of the non-competition limb, which protected confidential tender and costing information . A restraint drafted as genuinely separate covenants can lose two limbs and still deliver an injunction on the third.
A cascading clause is the practical answer to Western Australia's no-read-down rule, but only if each rung is a self-contained covenant that can stand after the wider rungs are deleted — the courts sever distinct covenants, not parts of a single one . Do not bury the breadth in a defined term that runs through every rung: if the unreasonable element sits inside a single shared definition rather than in a separable covenant, a court cannot blue-pencil it out and every restraint built on that definition is at risk .
Sources for this answer
Case law · 2012-10-17
C.1 Emeco International Pty Ltd v O'Shea [No 2]Genuinely separate restraint covenants can be severed from one another at common law, and an express severance clause confirms that intention.
The clear intention of the contractual severance clause is that the Competitor Restraint could be severed from the other restraints and this is possible at common law since those clauses are really separate covenants.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
Case law · 2012-10-17
C.3 Emeco International Pty Ltd v O'Shea [No 2]Because the covenants were separate, the court could enforce the competitor restraint while holding the other restraints unenforceable.
My conclusion is that the restraint which I have described in these reasons as the Competition Restraint, preventing Mr O'Shea from performing work for NPE, is enforceable. Other restraints upon which Emeco relied are not enforceable.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
Case law · 2016-04-11
C.2 Bend-Tech Group (A Firm) v BeekSeverance is permissible only where the covenant is not really a single covenant but is in effect a combination of several distinct covenants.
The doctrine of severance has not, I think, gone further than to make it permissible in a case where the covenant is not really a single covenant but is in effect a combination of several distinct covenants.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J), quoting Attwood v Lamont (Younger LJ).
Case law · 2018-06-15
C.4 Austal Ships Pty Ltd v ClayAt the interlocutory stage the Court assessed each limb of the restraint separately, found no prima facie case for the two non-solicitation limbs, and was satisfied — on the basis of confidential information — that there was a prima facie case the restraint was reasonable and enforceable.
In these circumstances, I am satisfied that Austal has demonstrated a prima facie case (or that there is a serious question to be tried) that the restraint in cl 8.2 is reasonable and enforceable.
See Austal Ships Pty Ltd v Clay [2018] WASC 178 (Smith AJ).
Case law · 2012-10-17
C.5 Emeco International Pty Ltd v O'Shea [No 2]A single overbroad definition feeding several restraints cannot be internally severed, so the breadth of a defined term endangers every restraint built on it.
The definition of 'Client' cannot be internally severed in this case.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
What legitimate interest must an employer show to enforce a Western Australian 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 recognised interests are the employer's customer connection and its confidential information, and a single restraint may be justified as protecting more than one of them .
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.”
An employee's own general skill, experience, and know-how sit on the employee's side of the line. In Bend-Tech Group (A Firm) v Beek the Court emphasised that the non-competition clause would effectively stop the former employee from using skills accumulated over virtually the whole of his working life to earn a living in any similar business — exactly the kind of restriction the doctrine exists to prevent . By contrast, where the interest is real, it will carry the clause: in Emeco International Pty Ltd v O'Shea [No 2] the employer's legitimate interest in its confidential information and customer connections was sufficient to show that the competitor restraint was reasonable . The practical point for drafters is that the interest has to be identified and genuine. An employer who cannot point to a real customer connection or confidential-information interest cannot enforce the clause whatever its scope.
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 or the confidential information — and draft the restraint around it; a properly targeted competitor restraint grounded in those interests has been held reasonable .
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 · 2018-06-15
D.2 Austal Ships Pty Ltd v ClayThe legitimate interests by which a restraint is commonly justified are customer connection and confidential information, and a restraint may protect more than one interest.
The legitimate interests about which a restraint is commonly justified is customer connection and confidential information. A restraint may be justified as protecting more than one legitimate interest.
See Austal Ships Pty Ltd v Clay [2018] WASC 178 (Smith AJ), quoting Workplace Access and Safety Pty Ltd v Mackie [2014] WASC 62 (Edelman J).
Case law · 2016-04-11
D.3 Bend-Tech Group (A Firm) v BeekA non-competition clause that would stop a former employee from using the skills accumulated over virtually his whole working life to earn a living reaches beyond any protectable interest into the employee's own know-how.
As for the non-competition clause, this clause effectively prohibits Mr Beek not only from acting as a director of Tarian Pty Ltd, but also of using the skills he has accumulated over the course of virtually the whole of his working life to earn a living in the employ of any business similar to that operated by Bend-Tech.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Case law · 2012-10-17
D.4 Emeco International Pty Ltd v O'Shea [No 2]A legitimate interest in confidential information and customer connections was sufficient to show that the competitor restraint was reasonable.
For the reasons explained above, Emeco's legitimate interest in its confidential information and in protecting its customer connections is sufficient to show that the Competitor Restraint is reasonable.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
How long and how wide can a Western Australian 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 actual customer influence. Reasonableness is tested as at the date the contract was made, not by hindsight , although later events can shed light on what the parties could reasonably have estimated at that date . An area wider than the employer's business reaches, or a period longer than the interest requires, is likely to be unreasonable .
Because the limits are judge-made, there is no fixed ceiling to anchor a covenant, and the analysis cuts both ways. 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 .
“I think it must be held that the area was unreasonably wide.”
Duration is assessed the same way: the question is objective, not a matter of what the parties assert . The Western Australian decisions discussed here give a feel for where the line sits. A six-month competitor restraint on a business development manager was held reasonable in Emeco International Pty Ltd v O'Shea [No 2] , and the Court of Appeal in Smith v Nomad Modular Building Pty Ltd dismissed an appeal against an injunction enforcing a non-competition clause that protected confidential information. By contrast, in Bend-Tech Group (A Firm) v Beek a 12-month restraint covering the whole State failed even to raise a prima facie case at the interlocutory stage. Seniority and access matter on both sides of that comparison: the closer the employee sat to the customers or the confidential information, the longer and wider a restraint can plausibly be, but the burden of proving the fit remains on the employer.
Sources for this answer
Case law · 2007-08-13
E.1 Smith v Nomad Modular Building Pty LtdThe validity of a restraint is decided as at the date of the contract.
The validity of the restraint must be decided as at the date of the contract: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 318 per Walsh J.
See Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 (McLure JA, citing Amoco v Rocca Bros per Walsh J).
Case law · 2016-04-11
E.2 Bend-Tech Group (A Firm) v BeekReasonableness is determined at the date of the contract, but subsequent developments can be considered to test whether the agreement was reasonable at that date, having in mind the parties' best estimate of the future.
Although the question of reasonableness is determined at the date of the contract, subsequent developments can be considered to determine whether the agreement was reasonable at the date of contract, having in mind the best estimate that the parties could make for the future.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Case law · 1950-09-29
E.3 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 · 2012-10-17
E.5 Emeco International Pty Ltd v O'Shea [No 2]A six-month restraint period was held reasonable, with the real fight being over the breadth of the restraint's operation rather than its duration.
No substantial submission was made to suggest that the six month period of the restriction was unreasonable. I am satisfied that it was reasonable.
See Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 (Edelman J).
Case law · 2004-04-22
E.4 Cream v Bushcolt Pty LtdWhether the duration of a restraint is reasonable is an objective question.
The objective question is whether the duration of the restraint was reasonable.
See Cream v Bushcolt Pty Ltd [2004] WASCA 82 (Malcolm CJ; Miller and McKechnie JJ agreeing).
Do paid restraints, garden leave, and fresh consideration help in Western Australia?
They can strengthen an employer's position, but they do not displace the reasonableness requirement, and no Western Australian authority discussed here decides a case squarely on a paid restraint or a garden-leave clause. The framework remains the same two-sided test: necessary for the adequate protection of the employer, while preserving the fullest liberty of action for the employee consistent with that protection . Payment for a restraint is sensibly understood as a factor that may support reasonableness within that test, not a separate gateway to enforcement.
Garden leave — keeping the employee employed and paid through a notice period rather than relying on a post-termination covenant — is not the subject of any settled Western Australian rule in the authorities discussed here. A court asked to enforce a garden-leave arrangement or a paid post-termination restraint would be expected to apply the ordinary restraint-of-trade analysis, in which the fact that the employee continues to be paid bears on how far the clause intrudes on the employee's liberty of action . That is a contingent assessment, and an employer should not assume that payment alone will carry an otherwise overbroad clause.
For mid-employment restraints — covenants introduced after the employee is already on foot — the practical concern follows from the timing rule: validity is tested as at the date the restraint is agreed . A restraint added later is judged on the circumstances at that later date, not on the original hiring, and it needs its own consideration to be binding as a matter of ordinary contract law.
Sources for this answer
Case law · 2016-04-11
F.1 Bend-Tech Group (A Firm) v BeekAny restraint, paid or unpaid, must be necessary for the adequate protection of the employer while preserving the fullest liberty of action for the employee consistent with that protection.
A restraint will be reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection.
See Bend-Tech Group (A Firm) v Beek [2015] WASC 491 (Pritchard J).
Case law · 2007-08-13
F.2 Smith v Nomad Modular Building Pty LtdValidity is decided as at the date of the contract, which governs how a restraint introduced mid-employment is assessed.
The validity of the restraint must be decided as at the date of the contract: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 318 per Walsh J.
See Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 (McLure JA, citing Amoco v Rocca Bros per Walsh J).
What if the employer wrongfully dismissed the employee?
The restraint may fall away. The employer carries the onus of proving the restraint reasonable in the first place , so an employer seeking an injunction already starts from a position where it must justify the covenant. Beyond that, the long-standing common-law principle associated with General Billposting Co Ltd v Atkinson [1909] AC 118 is that an employer who wrongfully dismisses an employee — for example by repudiating the contract through a dismissal without the notice the contract requires — generally cannot afterwards enforce a post-employment restraint against that employee. The Western Australian authorities discussed here do not themselves decide that point, so it is best treated as a general principle a court may apply rather than a settled Western Australian rule.
The reasonableness analysis assumes a clause the employer is entitled to rely on, and the employer bears the onus of establishing that reasonableness . Where the employer is the party in serious breach, a court may, applying the general common-law principle, treat the employee as released from the covenant; and in any event the equitable remedy an employer needs — chiefly an injunction — is discretionary and sensitive to the employer's own conduct.
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 — without giving contractual notice or paying in lieu — may risk losing the very non-compete it wants to rely on, because under the general common-law principle a repudiatory breach by the employer can release the employee from the restraint. That repudiation point is not settled by the Western Australian authorities discussed here, so treat it as a risk rather than a certainty: before suing to enforce a covenant, confirm that the termination itself complied with the contract.
Sources for this answer
Case law · 1950-09-29
G.1 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 Western Australian 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 Western Australian authority holds that a restraint period tolls — pauses and then resumes — while a former employee is in breach or while litigation runs. Validity is decided as at the date 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 clear Western Australian authority validating it. An employer that needs relief for an actual breach is on firmer ground seeking a tailored injunction or damages than relying on the clause itself to stretch the restraint. 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 clear Western Australian authority validates tolling of the restraint period, and because validity is decided as at the date 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 · 2007-08-13
H.1 Smith v Nomad Modular Building Pty LtdValidity is decided as at the date of the contract, which is in tension with a clause that automatically extends the restraint based on the employee's later breach.
The validity of the restraint must be decided as at the date of the contract: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 318 per Walsh J.
See Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 (McLure JA, citing Amoco v Rocca Bros per Walsh J).
Do Western Australian 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 , because the policy concerns that make employment covenants suspect — unequal bargaining power and the risk of locking a person out of their livelihood — are weaker when a vendor sells a business for value and promises not to compete away the goodwill just sold.
Leniency is not a free pass, though, and Cream v Bushcolt Pty Ltd is the Western Australian proof. For a sale covenant the touchstone is still the goodwill purchased: the most important consideration on duration is the time needed to sever the relationship between the vendor and the clients who would patronise the business after the sale . Measured against that yardstick, the Full Court held a ten-year restraint excessive and beyond what reasonable protection of the purchased goodwill required , and concluded that the restraints taken together went too far — the appeal was allowed and the restraint provisions were held void and unenforceable.
For contractors, the key question is the same one that governs employees: is there a legitimate interest, and is the scope no wider than necessary to protect it. The label matters less than the substance of the relationship and the interest at stake.
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 · 2004-04-22
I.3 Cream v Bushcolt Pty LtdFor a sale-of-business restraint, the most important consideration on duration is the time required to sever the relationship between the vendor and the clients who would patronise the business after the sale.
In this context it has been held that the most important consideration is the time required for severing the relationship between the vendor and those clients who would patronise the business after the sale: IRAF Pty Ltd v Graham [1982] 1 NSWLR 419 at 428 - 4529, per Roth J; and see Fleming Brothers (Monaro Agencies ) Pty Ltd v Smith (1983) ATPR 40-389.
See Cream v Bushcolt Pty Ltd [2004] WASCA 82 (Malcolm CJ; Miller and McKechnie JJ agreeing).
Case law · 2004-04-22
I.4 Cream v Bushcolt Pty LtdA ten-year duration was held excessive and beyond what reasonable protection of the purchased goodwill required, particularly where no part of the consideration was allocated to goodwill.
In the face of the concession by Mr Jones in the context of the objective facts, I consider that the 10-year duration of the restraint was excessive and beyond that required for the reasonable protection of the goodwill of the business being purchased, particularly in the context that no part of the consideration was allocated to goodwill.
See Cream v Bushcolt Pty Ltd [2004] WASCA 82 (Malcolm CJ; Miller and McKechnie JJ agreeing).
Case law · 2004-04-22
I.5 Cream v Bushcolt Pty LtdEven where some restraint would have been reasonable, the cumulative or combined effect of the restraints taken together constituted an unreasonable restraint of trade.
The cumulative or combined effect of the restraints taken together, however, constituted an unreasonable restraint of trade.
See Cream v Bushcolt Pty Ltd [2004] WASCA 82 (Malcolm CJ; Miller and McKechnie JJ agreeing).
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 Western Australia . 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 Western Australian 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 Western Australia still turns on the common-law reasonableness test and the blue-pencil-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 · 2007-08-13
J.1 Smith v Nomad Modular Building Pty LtdUnder the common-law restraint-of-trade doctrine that currently governs in Western Australia, a covenant restraining an ex-employee from competing is void unless justified by the special circumstances of the case.
Covenants that restrain an ex-employee from competing with the ex-employer are at common law contrary to public policy and void unless it can be justified by the special circumstances of the case.
See Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 (Pullin JA).