The Employment Relations Authority has upheld a claim by an employee’s former employer for breaches of confidentiality and breaches of the restraint of trade provisions in her employment agreement.

The ERA agreed that the employer had a proprietary interest to protect in information about its clients and operating systems and practices and that the restriction on being employed for two months within a 10 kilometre radius of the employer’s premises was reasonable.  These restrictions were therefore enforceable.  The employee tried to get around the 10 kilometre restriction by working from a café just outside the 10 kilometre limit, but the ERA held that her new employer’s offices were within the 10 kilometres and therefore it was a breach of the restraint.  She was in breach by commencing employment and continuing to compete within the 10 kilometres inside the two month period.

In addition the employee breached her confidentiality obligations by, on the last day of employment, emailing herself confidential information from her former employer and using that in her new employment.

The ERA found that both of these breaches were deliberate and ordered that a penalty of $5,915 be paid by the employee to her former employer.

It also issued a compliance order requiring her to comply with her confidentiality obligations going forward.

It was too late to prevent her from working for the new employer because the two month restriction on employment had already passed.

If employers have a real proprietary interest to protect and are reasonable in the duration, geographical limit and nature of the restriction then they will be able to enforce restraint of trade clauses.

Confidentiality clauses are enforceable as a separate requirement.

Alan Knowsley
Employment Lawyer