Posted on September 14, 2023
Labour currently has a Bill before Parliament which, if enacted, could significantly limit how employers can rely on restraint of trade clauses.
This is a private member’s Bill by Labour MP, Helen White. It has had its First Reading and is before the Select Committee, with a report due in January 2024, but as National opposes the Bill, it’s unlikely to progress if Labour is not re-elected next month.
If the Bill was passed into law, restraints would only be enforceable if:
- The employee earns more than three times the minimum wage (i.e. a salary above $141,648 (gross) pa);
- They apply for no longer than 6 months post termination;
- The employee is paid at least half their average weekly earnings for the period that the restraint is in effect; and
- The employee’s employment agreement describes the proprietary interest that the restraint protects.
If this Bill was passed, many of our clients would need to reconsider their employment agreements and the protections around proprietary information when employees depart. We will monitor progress, which is subject to the election results.
