Investigating Breach of Restraint of Trade: What to Know

When Professional Boundaries Are Crossed

In today’s competitive business landscape, protecting your intellectual property, client relationships, and confidential information is more important than ever. That's why many companies include restraint of trade clauses in employment contracts — to prevent employees from unfairly competing, poaching clients, or disclosing sensitive knowledge after leaving a role.

But what happens when those restraints are breached? A former employee starts working for a direct competitor. Clients mysteriously migrate. Confidential data turns up in the wrong hands. That’s when a business must act — and act strategically. Investigating a breach of restraint of trade is not just about proving wrongdoing; it’s about gathering solid evidence in a legally defensible way.

At Complete Corporate Services (CCS), we’ve spent over four decades supporting Australian businesses, law firms, and corporate clients in navigating complex post-employment disputes.

In this blog, we’ll break down the process of investigating restraint of trade breaches — from early signs to legal action — and how professional investigators can help you protect what’s rightfully yours.

What Is a Restraint of Trade Clause?

A restraint of trade clause is a contractual provision designed to restrict an employee’s actions after leaving a company. These clauses are common in industries where employees have access to sensitive commercial information, trade secrets, or long-term client relationships.

Typically, restraint clauses might prohibit:

• Working for a competitor within a certain geographic area
• Soliciting clients or suppliers of the former employer
• Poaching staff or recruiting former colleagues
• Using confidential information acquired during employment

While courts are cautious about enforcing restraints — as they limit a person’s right to work — they will uphold them if they are reasonable in scope, duration, and necessary to protect legitimate business interests.

Why Breaches Happen

Breaches of restraint of trade can occur for various reasons, and not always with malicious intent. Common causes include:

• Lack of understanding: Former employees may not fully grasp the terms of their restraint clause.
• Opportunity and temptation: High-value clients may follow a trusted employee to a competitor.
• Pressure from new employers: A competitor may actively encourage breach, especially in aggressive markets.
• Deliberate sabotage: In rare cases, breaches are premeditated and executed with full knowledge of contractual risks.

Regardless of motive, if a breach occurs, swift investigation is key to preventing further harm and preserving legal remedies.

Early Warning Signs of a Breach

Spotting the warning signs of a restraint breach early can limit the damage and strengthen your case. Common red flags include:

• Client Losses: Longstanding clients suddenly stop working with you or mention contact with a former employee.
• Rumours and Tips: Industry whispers suggest a former employee has joined a competitor despite restraints.
• Changes in Staff Behaviour: Current employees become reluctant to talk or appear aligned with former colleagues.
• Data Access Logs: Digital forensics show unusual downloads, email forwards, or access to client files prior to departure.
• Unusual Market Activity: A competitor seems to have insider knowledge about pricing, strategy, or product roadmaps.

These signs warrant attention — and if substantiated, a formal breach of restraint of trade investigation should be initiated.

The Role of a Private Investigator

Corporate lawyers often turn to experienced private investigators to gather hard evidence in restraint of trade cases. This is because a legal claim alone isn’t enough — it needs to be backed by facts, documents, patterns of behaviour, and, in some cases, covert intelligence. At CCS, our private investigators assist in:

1. Surveillance

Discreet observation can confirm whether a former employee is physically working for a competitor or interacting with restricted clients or suppliers.

2. Digital Forensics

We can analyse devices, emails, and cloud activity (subject to access permissions) to uncover unauthorised transfers of data, suspicious logins, or communications that indicate intent to breach.

3. Online and Social Media Monitoring

A surprisingly effective tool — many breaches are inadvertently revealed via LinkedIn updates, client posts, or company staff pages that show a new hire in a competing role.

4. Interviews and Affidavits

We can conduct interviews with clients, staff, or other relevant parties to gather testimony that may support or disprove breach allegations.

5. Background Checks on Competitors

Investigating the competitor’s hiring patterns, relationships with clients, or history of previous restraint disputes can support a broader legal strategy. Our goal is not only to uncover misconduct but to do so in a way that ensures the evidence is admissible, reliable, and ethically obtained.

What Makes an Investigation Legally Sound?

Because restraint of trade issues often lead to litigation, any investigation must follow proper legal and ethical standards. This includes:

• Privacy Compliance: Surveillance and data collection must not violate privacy laws or trespass on personal liberties.
• Consent and Disclosure: For forensic analysis, ensure you have legal rights to access devices or systems.
• Chain of Custody: Proper documentation of how evidence was gathered, stored, and handled is crucial.
• Fairness and Objectivity: Investigations should be neutral and fact-driven — not a witch hunt.

At CCS, all of our investigations are conducted under the guidance of current legislation, including the Fair Work Act, Australian Consumer Law, and state-level surveillance and privacy laws.

Proving a Breach: Building a Case

To take action, you’ll need more than suspicion. A legally compelling case usually requires evidence that shows:

• The existence of a valid and enforceable restraint clause
• That the former employee was aware of and agreed to the clause
• That the employee breached the terms (e.g., by working for a competitor or soliciting clients)
• That the breach caused or is likely to cause material harm to your business

Supporting this with documented proof — emails, messages, financial records, witness testimony, surveillance reports — significantly improves your legal position.

Remedies for Breach of Restraint of Trade

If a breach is confirmed, your options may include:

• Cease and Desist Letter: A formal warning that outlines the breach and demands immediate compliance.
• Injunctions: Court orders that prevent the former employee (or new employer) from continuing the breach.
• Damages: Financial compensation for losses directly resulting from the breach.
• Legal Action Against New Employer: If a competitor knowingly induced the breach, they may also be liable.

A robust investigation gives your legal team the leverage needed to negotiate, litigate, or pursue settlement from a position of strength.

Preventing Breaches Before They Happen

While investigating breaches is critical, prevention is even better. Here are some proactive steps:

• Draft Strong, Clear Clauses: Work with legal professionals to ensure restraint clauses are enforceable and reasonable.
• Communicate Clearly: Ensure employees understand their obligations — especially during exit interviews.
• Monitor Exit Activity: Audit digital activity, emails, and file transfers during the offboarding process.
• Restrict Access: Revoke access to sensitive systems immediately upon notice of departure.
• Conduct Periodic Reviews: As your business evolves, so should your post-employment protections.

And if you're ever unsure whether your clauses are enforceable or your approach is compliant, get a professional opinion — early.

Why Choose CCS for Your Restraint of Trade Investigations?

At Complete Corporate Services, we don’t just chase facts — we deliver results that withstand scrutiny. With over 40 years of investigative experience, we:

• Provide confidential, unbiased investigations
• Work seamlessly with legal teams to support litigation strategy
• Offer surveillance, forensic, and intelligence services under one roof
• Ensure evidence is gathered legally and securely
• Protect your business, reputation, and competitive edge

From initial suspicion to final resolution, we’re your trusted partner in uncovering the truth and enforcing your rights.

Knowledge Is Power, and Protection Is Essential

A breach of restraint of trade isn’t just a contractual dispute — it’s a direct threat to the commercial and ethical foundation of your business. These clauses exist not to restrict competition unfairly, but to protect the legitimate interests you've worked hard to build — your clients, your trade secrets, your market strategy, and your people. When those protections are ignored or deliberately undermined, the consequences can be far-reaching.

Unchecked breaches can lead to:

• Erosion of client relationships that took years to cultivate
• Exposure of proprietary information that gives your business a competitive edge
• Poaching of key staff, destabilising your internal structure
• Loss of market share, allowing competitors to gain from your investments
• Legal vulnerability, especially if stakeholders question why you didn’t act sooner

In short, the longer you wait, the harder it becomes to contain the damage.

But with a timely, strategic, and well-executed investigation, you don’t just defend what’s yours — you reaffirm your business values. You show your clients, staff, and competitors that your business operates with integrity, and that you take contractual commitments and fair competition seriously.

At Complete Corporate Services (CCS), we’ve supported Australian businesses for over four decades in managing, investigating, and responding to breaches of restraint of trade. Whether you’re gathering early evidence, preparing for legal proceedings, or simply want to understand if a breach has occurred, our team is here to guide you with discretion, clarity, and precision.

Don’t let silence or uncertainty work against you. If you suspect a breach, act now — before your opportunity to respond effectively slips away.