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Employment Law – Ex-Employee Restraint Clause Unenforceable    

Employment Law – Background

The Victorian Court of Appeal reaffirmed a decision that an employer was unable to enforce a restraint clause against an employee. The accounting firm’s breach of an employment contract consequently ended its right to enforce a restraint clause against the accountant. The case highlights the importance of carefully assessing any differing views between the employee and employer in employment law.

Employment Law – Facts

In essence:

  • the employee-accountant signed an employment contract in 2012
  • the contract contained a restraint clause that operated for 12 months. Notably, the terms were found to be reasonable by judges in earlier cases
  • the accounting firm expanded its business over 2015-16
  • the accounting firm denied the accountant certain bonuses he believed he was entitled to
  • as a result, the accountant requested payment to which the employer refused
  • the accountant took a week’s leave. A few days after he returned, he informed the employer he considered the refusal to pay the bonuses as a repudiation of the employment contract
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Importance of Careful Drafting for Council Contracts


Case Note: Port Macquarie-Hastings Council v Diveva Pty Limited [2017] NSWCA 97

In a recent decision, the Court of Appeal of NSW made a determination which is particularly instructive for Councils when undertaking any tender process. The decision highlights the importance of carefully drafting contracts and the need to ensure that sufficient information is provided to potential tenderers during the tender process.

In 2011, Diveva Pty Limited (Diveva) successfully entered into a contract with Council to supply and lay asphalt around Council’s local government area. The contract had a simple “option” clause which merely stated that the period of the agreement was to be two years “with a future twelve (12) month option available”.

Diveva conducted works under the contract throughout 2011 and 2012 but Council observed significant defects in the works during this period. Due to the defective work, in March 2013 Council advised that it would not exercise the option to extend and a new tender would be advertised.  In April 2013, Diveva gave notice that it would exercise the option to extend for a further 12 months. Council asserted that the option was not a unilateral clause for the benefit of Diveva and could only be exercised by the Council or by mutual agreement. Therefore, Council commenced the tender process and entered into agreement with another company for those services.
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