Are restraints of trade enforceable NZ?
Restraint of trade clauses are enforceable in New Zealand if it is reasonable for the employer to do so. How do you enforce a restraint of trade? To enforce a restraint of trade clause, an employer must first establish that enforcement will be reasonable.
Can a company stop me from working for a competitor?
Under California Business and Professions Code Section 16600, unless you were an owner of the business, any “non-compete clause” which forbids an employees who is fired or resigns from working for a competitor or starting a competing business is illegal and unenforceable.
Can employers enforce restraint of trade?
A restraint of trade clause can only be enforced if the conditions are reasonable and the employer has a specific business interest to protect. Fear of competition is not a reasonable excuse to enforce a restraint of trade clause.
What is a restraint period in an employment contract?
A restraint clause will normally refer to both a geographical area and also to a time frame. For example, the clause may refer to the restraint period as being 12 months or 6 months or 3 months.
How do I get out of a restraint of trade?
An employee who wants to be released from a contract in restraint of trade must be able to persuade the court that his or her right to work outweighs the potential prejudice his ex-employer could potentially suffer if the employee leaves and competes with the ex-employer in the open market.
Can you restrain an independent contractor?
A restraint of trade clause attempts to prevent an employee and/or independent contractor from engaging in competitive activities which may adversely affect the business.
What is an unreasonable restraint of trade?
If the restraint of trade clause is unreasonable, the Employment Relations Authority or Employment Court may state that the clause cannot be enforced so the employee does not have to comply with it. The courts also have the power to modify contracts to make restraint of trade clauses reasonable.
How does restraint trade work?
The purpose of a restraint of trade clause, most typically, is to prevent and/or oblige employees to refrain from competing with their previous employer for the business and/or commerce of such an employer.
What is a contract in restraint of trade?
‘A contract in restraint of trade is one in which a party (the covenanter) agrees with any other party (the covenantee) to restrict his liberty in the future to carry on trade with other persons not parties to the contract in such manner as he chooses. ‘
Does restraint of trade apply when fired?
In general there is a duty on employees to comply with restraint of trade clauses after termination of employment. However, some restraint of trade clauses may be deemed to be unenforceable. More likely than not, a vast majority of employment contracts these days contain a restraint of trade clause.
How can an employer enforce a restraint of trade?
For an employer to enforce a restraint of trade there must be a specific restraint of trade clause in the employment agreement. Even if there is such a clause in the employment agreement, it may not be enforceable.
What happens if a restraint of trade clause is unreasonable?
If the restraint of trade clause is unreasonable, the Employment Relations Authority or Employment Court may state that the clause cannot be enforced so the employee does not have to comply with it. The courts also have the power to modify contracts to make restraint of trade clauses reasonable.
What are the different types of restraint clauses in NZ?
Below are the two most common types of restraint clauses in NZ: Non-Competition: prevents a former employee from working for a company that conducts work that is similar to their former employer’s business. Non-Solicitation: allows a former employee to work for a company in a similar field or industry.
What are the different types of restraints of trade?
The most common types of restraints of trade are agreements that the employee will not poach the employer’s clients or staff or that the employee will not work for any of the employer’s competitors. Restraints are typically limited in scope by reference to: the geographic area in which the employee agrees to limit their activities.