Question

Scenario 2 Case Study – Akshita and Underground Solutions Pty Ltd

Akshita runs a construction company called Underground Solutions Pty Ltd (US) that specialises in tunneling.

Every employment contract at US contains the following clause:

“No employee can use the same skills employed at Underground Solutions Pty Ltd at any other firm operating in Australia for ten years after finishing a role at Underground Solutions Pty Ltd.”

Two of Akshita’s employees, Lin and Dimitri, decide to leave the company and hand in their notice. Akshita learns that Lin has accepted a new job at Grow Tall Pty Ltd (GT), a construction company that specializes in designing and building new parks and public spaces. Dimitri, meanwhile, has accepted an offer at Long Way Down Pty Ltd (LWD), a competing tunneling firm. US, GT, and LWD all operate across Australia and have local, state, and federal governments as their primary clients.

Akshita wishes to enforce the above clause against her former employees.

Can Akshita enforce the above clause against her former employees? How can she might structure similar clauses in the future to prevent them being challenged? Please use case law to support your answer.

Note: Research is required for this scenario. You may rely on the course materials to answer this question, but it is expected that you also research beyond the course materials. Please restrict your answers to the application of contract law (and, specifically, the content of Topics 3 & 4).

Suggested word count: 500-600 words.

THE QUESTION IS IN BOLD TEXT

Answer 1

Ans. As per the given scenario, employment contract at Underground Solutions Pty Ltd.contains the following clause: "No employee can use the same skills employed at Underground Solutions Pty Ltd at any other firm operating in Australia for ten years after finishing a role at Underground Solutions Pty Ltd."

Now, Lin and Dimitri, decide to leave the company and hand in their notice. (i) Lin has accepted a new job at Grow Tall Pty Ltd (GT), a construction company that specializes in designing and building new parks and public spaces. (ii) Dimitri has accepted an offer at Long Way Down Pty Ltd (LWD), a competing tunneling firm.

All these companies operate across Australia and have local, state, and federal governments as their primary clients.

In the given scenario, Akshita can enforce the employment clause on Dimitri as she has been indulged in the business competing with the business of Underground Solutions Pty Ltd. However, Akshita can not enforce the employment clause on Lin as she has not been indulged in the business which requires the same skill set as the business of Underground Solutions Pty Ltd.