| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Wellington |
| Reference No | [2012] NZERA Wellington 75 |
| Hearing date | 5 Jun 2012 |
| Determination date | 04 July 2012 |
| Member | M Ryan |
| Representation | D Erickson; J Douglas |
| Location | Napier |
| Parties | McKinnon v Elders Rural Holdings Ltd |
| Summary | RESTRAINT OF TRADE – Applicant sought declaration restraint of trade clauses in parties’ employment agreement unenforceable – Authority found non-competition clause not unreasonable – Authority ordered non-competition clause geographical constraint be reduced - Found given applicant’s seniority and experience, reasonable to retain non-competition clause but ordered duration be reduced to three months – Found non-solicitation and non-dealing clauses unreasonable and unenforceable - Applicant to comply with modified restraint of trade clauses - Merchandise Sales Representative |
| Abstract | Applicant employed as merchandise sales representative. Parties’ employment agreement included restraint of trade clauses. Applicant sought declaration clauses unreasonable and unenforceable or alternatively that clauses be modified. Applicant commenced employment with respondent’s competitor (“X”) but in X branch outside prohibited geographical area. Respondent claimed clauses reasonable, respondent and X major suppliers of farm products in area and applicant had access to all confidential information as part of employment.;AUTHORITY FOUND –;RESTRAINT OF TRADE: Respondent had proprietary interest in client information. Non-competition clause not unreasonable. Breadth of non-competition clause geographical constraint went beyond what was required to protect respondent’s trade connections although reasonable for respondent to restrain applicant from working in same geographical area previously responsible for as respondent’s employee. Ordered non-competition clause geographical constraint be reduced. Given applicant’s seniority and experience, reasonable to retain non-competition clause but ordered duration be reduced to three months. Non-solicitation clause so broad compliance difficult. Non-solicitation clause unreasonable and unenforceable however respondent proprietary interest adequately protected by modified non-competition clause so discretion to modify non-solicitation clause not exercised. Non-dealing clause unreasonable and unenforceable. Applicant to comply with modified restraint of trade clauses. |
| Result | Application partially granted ; Orders made ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s162;ERA s164;Illegal Contracts Act 1970 s8 |
| Cases Cited | Airgas Compressor Specialists Ltd v Bryant [1998] 2 ERNZ 42;Allright v Canon New Zealand Ltd (2009) 9 NZELC 93,141;Century Yuasa Batteries (NZ) Ltd v Johnson unreported, Colgan J, 11 November 2004, AC65/04;Fletcher Aluminium Ltd v O’Sullivan [2001] ERNZ 46 ; [2001] 2 NZLR 731;Gallagher Group Ltd v Walley [1999] 1 ERNZ 490;Green v Transpacific Industries Group (NZ) Ltd (2011) 8 NZELR 238;Warmington v Affco New Zealand Ltd [2012] NZEMPC 19 |
| Number of Pages | 17 |
| PDF File Link: | 2012_NZERA_Wellington_75.pdf [pdf 270 KB] |