Case Review - Post-Employment Restraint Clauses - AGA Assistance Australia Pty Ltd v Tokody [2012] QSC 176

This Queensland Supreme Court decision examines whether a post-employment non-competition restraint of 12 months was reasonable and enforceable against a senior executive with significant client relationships and access to commercially sensitive information.

The court granted final injunctive relief enforcing a 12-month restraint, emphasising the nature of the role, the value and shelf-life of confidential information, and the real risk that client goodwill might be leveraged if the employee joined a competitor.

What happened

• AGA Assistance (a travel insurance provider) employed Ms Tokody for more than a decade in senior national sales roles reporting to the CEO. Her contract contained a cascading non-compete offering alternative durations of three, six or twelve months, commencing on cessation of employment, with national scope.

• AGA sought to restrain her from working for a direct competitor within Australia. The case turned on whether the restraint went no further than reasonably necessary to protect AGA’s legitimate interests, including confidential pricing, commission structures, profitability data and key client relationships.

Case Review - Post-Employment Restraint Clauses - AGA Assistance Australia Pty Ltd v Tokody [2012] QSC 176

What the court decided

• Reasonableness and the protectable interests: McMurdo J applied the familiar restraint principles, noting that restraints are prima facie void unless reasonable by reference to the parties’ interests and the public interest. In this context, the employer’s confidential information and client connections were legitimate interests capable of protection.

• Risk and shelf-life: The court assessed the real risk that a competitor could use the executive’s live knowledge of contract terms, pricing and profitability and the influence arising from her relationships. It accepted that the confidential information had a shelf-life beyond twelve months given three-year client contract cycles, and that relationships could, at least in part, shift business if she moved to a rival.

• Duration and scope: Of the cascading options, a 12-month restraint across Australia was held to be no broader than reasonably necessary in the circumstances of a high-ranking national sales executive. Final injunctive relief was granted to enforce the restraint.

Why this case matters

• Seniority and access matter: Where a role is high-level and steeped in client strategy, pricing and profitability, courts may find a longer non-compete reasonable to neutralise the competitive advantage of recently-acquired information and influence.

• Relationships alone are not enough: The court distinguished mere client familiarity from relationships that create a strong probability of clients moving to follow the executive. It is the likely movement and competitive harm, not mere contact, that supports enforcement.

• Cascading drafting assists: A cascade gave the court calibrated options. On these facts, the outer limit of 12 months was justified; shorter periods would not have adequately protected the legitimate interests identified.

Key takeaways in plain terms

• Non-competes can be enforced against senior staff where confidential information and client influence present a real, time-bound competitive risk.

• Courts look closely at the role, the nature and shelf-life of the information, the likelihood of client movement, and whether the geographic and temporal reach is no broader than necessary.

• The governing test remains reasonableness by reference to the parties and the public interest; that principle is explicitly reaffirmed in discussions of this decision.