Restraint of trade not enforced | Employment Law Update March | bossed

In a recent determination, the Employment Relations Authority found that 12 months was too long a period of restraint for a senior motorcycle technician.

The restraint sought to prevent the employee from carrying on any business in competition with the employer for that period of time. Following his resignation, the employee set up his own business which involved servicing, repairing and modifying motorcycles.

In considering 12 months was unreasonable the Authority observed that the employee was not a highly paid executive and was earning $30 an hour while working for the employer, which on an annual basis equated to a little over $60,000. There was some evidence that he had some connections with customers that might form the basis of a restraint, but insufficient evidence of confidential information or trade secrets.

The Authority considered that a period of three months would have been sufficient for the employer to contact its customers and attempt to shore up its business. However, the Authority chose not to make any modification to the restraint of trade given that four months had already passed by the time of the hearing.

See Action Sports Direct Ltd v Kroeze [2019] NZERA 409.

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