Non-compete agreement, Vellum Hair Studio

Non-compete agreement template with cascading restraint clauses

An Australian non-compete lives or dies on how it is drafted, because a court will not rewrite one that reaches too far. This one restrains a senior stylist from a competing salon using three separate covenants of falling reach, from 5 kilometres for six months down to 1 kilometre for three, and pays $4,500 for them.

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Non-compete agreement · Vellum Hair Studio and R. Cho · NC-2027-04Page 1 of 3
Non-compete agreement · Vellum Hair Studio and R. Cho · NC-2027-04Page 2 of 3
Non-compete agreement · Vellum Hair Studio and R. Cho · NC-2027-04Page 3 of 3
Non-compete agreement

Made on 3 August 2027 between Vellum Hair Studio Pty Ltd, ABN 21 604 338 917, of 88 King Street, Newtown NSW 2042, called the Employer, and Renata Cho of 12 Denison Street, Marrickville NSW 2204, called the Employee, who has worked as a senior stylist since 4 February 2024.

6 months
Longest restraint
5 km
Widest area
12 months
Client non-solicit
$4,500
Payment for it
1. Why this agreement exists
1.1
What the Employer is protecting
The Employee holds the salon’s client list, its pricing, its colour formulations and its supplier terms, and is the stylist several hundred clients ask for by name. This agreement protects those things for a short period, and does not exist to stop her working as a hairdresser.
1.2
What she is paid for it
The Employer pays the Employee $4,500 within seven days of signing, as a separate payment for these restraints and not as wages, a bonus or a retention payment for staying. That payment is not repayable if she leaves, because it buys the restraints rather than the service.
2. What the words mean
2.1
Restricted business
A hairdressing or barbering salon, a mobile hairdressing service, or a chair rental arrangement in a salon. It does not include beauty therapy, nails, education, product sales, or working behind the counter of a supplier.
2.2
Restricted client and restricted employee
A restricted client is a person the Employee personally served at the salon in her last 12 months there. A restricted employee is a person employed or contracted by the salon in that same period whom she worked alongside.
3. The restraint
3.1
Three separate covenants, not one
After her employment ends the Employee will not own, manage, work in or lend her name to a restricted business within the area and for the period of each combination below. Each row is a separate covenant, and the parties intend a court to be able to strike out one and leave the others standing.
Covenant
Area, measured from 88 King Street
Period after she leaves
A
Within 5 kilometres
6 months
B
Within 3 kilometres
4 months
C
Within 1 kilometre
3 months
Why the restraint is written as a cascade
Australian courts will not rewrite a restraint that reaches too far, and in New South Wales the Restraints of Trade Act 1976 lets a court read one down instead of striking it out. Writing three covenants of falling reach means a court has a narrower one to enforce if the widest is refused.
4. Clients and colleagues
4.1
Not approaching clients
For 12 months after she leaves, the Employee will not approach, canvass or solicit a restricted client for hairdressing services, whether directly, through a colleague, or through a social media post naming the salon or aimed at its clients.
4.2
Not recruiting colleagues
For 12 months after she leaves, the Employee will not approach a restricted employee to leave the salon, or help anyone else to do so. Employing someone who applies to a public advertisement she had no part in is not a breach.
5. What is not restricted
5.1
What she is free to do
The restraints above are the whole of them. In particular, none of the following is a breach.
Working as a stylist anywhere outside the area of the covenant that applies.
Serving a restricted client who comes to her unprompted after the 12 months.
Advertising generally, including a public social media post that names no client.
Working in beauty therapy, education, product sales or any other trade.
Telling clients where she is going, once the 12 month period has passed.
6. If a restraint is too wide, and remedies
6.1
Severance and reading down
If a covenant is held to be unenforceable, it is severed and the next narrower one applies. The parties agree that each area and each period is a separate and independent obligation, and that the agreement is read so as to give effect to the narrowest covenant that is enforceable.
6.2
Remedies, and acting promptly
The Employer may seek an injunction as well as damages. It must start proceedings within 30 days of learning of a breach, because a restraint this short is worth nothing if it is enforced late. This agreement is governed by the law of New South Wales.
For Vellum Hair Studio Pty Ltd
Name
:
Position
:
Date
:
Employee, Renata Cho
Name
:
Date
:

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Parties and restraint summary
Employer, employee, and a stats strip with the longest restraint, widest area and payment.
1. Why this agreement exists
The client list and formulations being protected, and the $4,500 paid for the restraints.
2. What the words mean
Restricted business, restricted client and restricted employee, each defined narrowly.
3. The restraint
Three separate covenants in a table, and a callout on why the cascade is drafted that way.
4. Clients and colleagues
Twelve months of client non-solicitation and twelve months of no recruiting colleagues.
5. What is not restricted
Five things she may do, including advertising generally and working in another trade.
6. Severance and remedies
Reading down to the narrowest enforceable covenant, injunctions, and acting within 30 days.

Clauses in this document

How to adapt this agreement

For a senior executive, expect the reasonable period to be longer and the area wider, and add garden leave so the restraint overlaps a paid notice period rather than running after it. For a business sale, write a separate restraint in the sale agreement, since a restraint given by a seller is judged far more generously than one given by an employee. For a role with no client contact and no confidential information, do not use this document at all, because a restraint with nothing to protect is the easiest kind to lose.

Which law the terms follow

The agreement is governed by the law of New South Wales, where the salon trades. That matters here: the Restraints of Trade Act 1976 applies only in New South Wales and lets a court read a restraint down to what is reasonable, while in other states a restraint that reaches too far is more likely to fail entirely. The cascade is drafted so the document works either way.

What makes this document work

Three covenants in a table, not one sentence with brackets

Covenant A is 5 kilometres for six months, B is 3 kilometres for four, C is 1 kilometre for three. Each row is a separate obligation, so a court that refuses the widest can enforce the next, and a reader can see immediately what the restraint actually costs them.

The restraint is paid for separately, and the document says why

$4,500 within seven days of signing, described as a payment for the restraints rather than wages, a bonus or a retention payment, and not repayable if she leaves. Consideration that is visible and separate is harder to argue away than a promotion mentioned in passing.

What she is free to do gets its own section

Five bullet points: work outside the area, serve a client who comes to her unprompted after the twelve months, advertise generally, work in another trade, and tell clients where she has gone once the period is up. A restraint that names its own limits is easier to enforce and easier to obey.

Questions people ask

Are non-compete agreements enforceable in Australia?

Only so far as they protect a legitimate business interest and go no further than reasonably necessary. Courts will not rewrite a restraint that is too wide, which is why this agreement uses cascading covenants. In New South Wales the Restraints of Trade Act 1976 also lets a court read a restraint down instead of striking it out.

What is a cascading restraint clause?

A restraint written as several separate covenants of falling reach, so that if the widest is unenforceable the next one still stands. Here the cascade runs 5 kilometres for six months, 3 kilometres for four, and 1 kilometre for three, with each row expressed as an independent obligation.

Does an employee have to be paid for a non-compete?

There must be consideration. A restraint agreed at the start of employment is usually supported by the job itself, but one added later needs something new. This agreement pays $4,500 as a separate payment for the restraints, which makes the consideration obvious rather than arguable.

What is the difference between a non-compete and a non-solicit?

A non-compete stops someone working in a competing business. A non-solicit only stops them approaching particular clients or colleagues. This agreement has both: the cascade restrains competition for up to six months, while the client and staff non-solicitations run for twelve.

How quickly does an employer have to act on a breach?

Under this agreement, within 30 days of learning of one. That is deliberate: a restraint of three to six months is worth nothing if proceedings start after it has expired, and a court asked to enforce a restraint the employer sat on for months is less likely to grant an injunction.

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