Restraint of Trade
If you are looking to start a new role or leave your current salon, it can be exciting but sometimes complicated by Restraint of Trade (ROT) clauses in your contract. These clauses can limit where and how you work after you leave your job. Here’s a simple guide to help you understand ROT clauses and what they mean for you.
What is a Restraint of Trade?
A Restraint of Trade is a part of your employment contract that restricts your work activity for a certain geographical area for a specific period of time after you leave your current salon. These clauses aim to protect the current salon by preventing you from competing against them and taking your current client base to a new salon because let’s face it – clients are in love with you and what you do – the salon is only a small part of it!
What should be included in Restraint of Trade clause?
A Restraint of Trade clause will have three (3) key elements:
The Activity that is being restricted: What is being restricted (i.e. hairdressing services)
The Locations and Area that is being restricted: Where the area is that is being restricted
The Duration that the restriction will apply: When the restriction will be in force and how long for after your employment ends
If any of these elements are missing, you may find that the Restraint of Trade is not valid.
How do I tell if I have a Restraint of Trade?
Check your contract - there should be a Restraint of Trade in your individual contract with the Salon. You may also find that it is referred to as something else, such as a “Non-Solicitation” clause. Always carefully check your contract for any clause that may talk about restricting your work activity after your employment end.
If you have only been verbally told that you have a Restraint of Trade, or if it is just generally referred to in a open policy document for the entire salon, you may find that the Restraint of Trade is not valid.
How do I to tell if my Restraint of Trade is valid and enforceable?
A Restraint of Trade needs to be fair and reasonable. It needs to balance the protection of the salon but should not make it too hard for you to find another job and earn a living. Many Restraint of Trade clauses are not enforceable by law.
You first need to find the relevant clause in your contract and you should look for the following:
How long is the restriction? Is it a reasonable amount of time, like six months to a year? Longer periods are not reasonable and could invalidate the Restraint of Trade.
Where does it apply? Is the area limited to the reasonable area your salon serviced? If it cover a much larger area, like the whole city or the whole country which may make it unreasonable and could invalidate the Restraint of Trade.
I am still not sure if my Restraint of Trade is enforceable – how can I check?
If you are not sure whether your Restraint of Trade is enforceable, you can seek your own independent legal advice to check before making a move. You can also use our FREE Clause Checker to confidentially submit your Restraint of Trade clause and get confidential and professional advice on whether your Restraint of Trade is enforceable and how to manage a move to another salon.
What if it is valid and enforceable, what then?
If you do have a valid Restraint of Trade clause, you can still make the move to the salon of your dreams – you just may need to look at how to practically manage the move to ensure you are not at risk of any action from the salon you are departing. You can book a free confidential chat with us to discuss your options.
At My Hair Career, we know that a Restraint of Trade can be scary and intimidating but we believe it should never stop you from taking the role of your dreams! Let us help you understand your rights and options so you can take the next step in your career – contact us for a confidential chat about your career opportunities.