A recent Employment Relations Authority decision has given a warning on the need to get your restraint clauses right.

The ERA found that the employer had no proprietary rights that needed protecting.  The employee was a chef making one particular product.  His knowledge of that product predated his employment, and he could not be stopped from being employed to make it for another employer as he was not using any proprietary information of the employer.

In addition the ERA refused to uphold the restraints because they sought to ban the employee from working in any food manufacturing business.  The restraint should only have related to what was necessary to protect the employer’s proprietary interests i.e. not making the same product for a competitor.

The restraint was for two years.  This was held to be far too long and three months might have been more appropriate.  The restraint was for the whole of New Zealand, and should only have related to the area where the employer did business.

The ERA said that, as there was no proprietary interest to protect, the clause was unenforceable.  Even if there had been an interest to protect it was worded so widely (activity, duration and geographical location) that it was unreasonable, and the ERA would not have used its power to amend the clause to make it reasonable and enforceable.

By being too greedy the employer could not use the clause to protect itself at all.  You need to get your restraint clauses right if you want to enforce them.

If you need assistance with reasonable restraints give me a call on (04) 473 6850.