Question: I am a contractor. Can my principal stop me from working with competitors in the same field?
Answer:Yes, a principal can stop a contractor from working with competitors in the same field, depending on whether the restraint area and scope is reasonable.
Restraint of trade clauses are prima facie void and the burden is on the employer/principal to persuade the Court that the clause is reasonable and therefore valid and enforceable.
The company hiring you as a contractor can seek a restraint of trade between you and their client to stop you from poaching clients, however it must be for a reasonable period of time, which will allow a new contractor to be hired and to build a relationship with the existing client. For example, it is possible that a 2 year restraint clause would be considered unfair and could be reduced by a court in accordance with the Independent Contractors Act 2006 (Cth).
