(Potential) Regulatory Function of Contractual Clauses: Restraints of Trade and Confidential Information in Employment Contracts

Abstract

The notion of “decentred regulation” from the field of regulatory theory is adopted in order to explore the idea that individual contractual clauses have the capacity to regulate the behaviour of both employers and employees. The focus here is on restraint of trade and confidentiality clauses. These make ideal exemplars because (a) one operates, to a large extent, during the course of employment while the other takes effect post employment and (b) because they are peripheral to the main clauses in a contract of employment. Using the concepts of norms and normative practices, and locating their use within the psychological contract, the article argues that individual clauses can regulate the behaviour of employers and employees as long as the existence of the obligations are emphasised and the normative basis for the clauses is communicated effectively.