An employee who had sold his business and signed up to a lengthy non-competition clause has had the clause enforced against him in the Employment Relations Authority. 

Seven years after selling his business and agreeing to the restraints the employee decided to resign from employment with his former business.  Several months later he took up employment at a rival firm, and began contacting former clients after using the phone book to obtain their contact details.

The ERA ordered the employee and the new employer to cease breaching the non-competition clauses for the balance of the three year period.  The ERA said the three year period was regarded as fair at the time it was signed as the business was sold for a substantial sum.  This meant that the three years restraint was still fair when the employee resigned.

Similarly the 400 km radius of the restraint was also fair as clients came from all over New Zealand.

The individual circumstances are important as there are no real averages. In this case the important factor was the substantial sale price of the business.
No damages were awarded as the employer failed to prove that the clients left because of the breaches of the restraint.

It is good to see the ERA enforcing employee obligations just as much as they do employer ones.

If you need help with advice on protecting your business with non-competition provisions give me a call.