Pay attention to a cascading restraints clause in your employment contract
A restraint of trade clause which provides for different levels of restraint in an employment contract is commonly referred to as a cascading restraint clause.
Cascading restraint clauses can operate by providing for multiple options in relation to distance, geography, time periods and the nature and type of conduct to be restricted.
Each variable is treated as an individual clause. Cascading restraint clauses cab be annulled and are independently binding. This means that where one level of restraint may be deemed too harsh, an employer can look to enforce a lower level restraint without the entire clause being invalidated.
The operation of cascading restraint clauses was tested in OAMPS Insurance Brokers Ltd v Hanna  NSWCA 781.
The decision by the New South Wales Court of Appeal confirms that these clauses are valid and enforceable.
OAMPS Insurance Brokers Ltd v Hanna
Mr Hanna started employment as an experienced insurance broker with OAMPS in 1990, resigned in 2010 and moved to a position with another insurance broker firm.
During his time with OAMPS, Mr Hanna’s employment was subject to a written employment agreement. A schedule to the employment agreement contained a post-employment restraint of trade clause.
After Mr Hanna left OAMPS, a dispute arose regarding the enforceability of the restraint clause in the contract.
The restraint clause itself was a cascading clause with 9 restraints. The restraints ranged from 15 months across Australia, down to 12 months across metropolitan Sydney.
OAMPS sought an order to prevent Mr Hanna from providing services to a number of its clients. The order was granted and Mr Hanna was restrained from dealing with 17 ...