A CFO's move to Cotton On, and a restraint naming 50 rivals

Nicole Peck became chief financial officer of Just Group, the retailer behind brands such as Smiggle and Peter Alexander, on 6 January 2016. Her package included a first-year salary of $450,000 and a $50,000 sign-on fee. On 1 May 2016 she accepted a CFO-level role at Cotton On, and the next day gave one month's notice. Her employment ended on 3 June 2016.

Her contract said that for 24 months (or, if a court disagreed, 18 or 12) she must not take part in any activity similar to the parts of Just Group's business she had worked in, or work for any of 50 listed brands and groups, Cotton On among them. Just Group sued to hold her to it. The trial judge refused, finding among other things that a restraint of at least a year sat oddly with a probation period in which she could have been let go on one month's notice. Just Group appealed.

The Court of Appeal agreed with the trial judge. An employer can protect its confidential information, but it has no legitimate interest in protecting itself from competition as such. The first part of the clause would have kept her out of any competing activity she had been involved in, whether or not she held its secrets, and the court refused to rewrite it to save it. As for the list, Just Group never explained how it chose the 50 names.

Nor would the court strike out every name except Cotton On. The list was one restraint, not 50 separate promises, and trimming it to fit what she had actually done would mean making a new contract for the parties. Quoting Justice Heydon's writing outside court, the judges said courts are 'referees, not players'. Leave to appeal was granted and the appeal dismissed.