| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Wellington |
| Reference No | [2012] NZERA Wellington 76 |
| Determination date | 05 July 2012 |
| Member | M Ryan |
| Representation | D McKay; G Ballara |
| Location | Wellington |
| Parties | Pure New Zealand Foods Ltd v Prakash |
| Summary | RESTRAINT OF TRADE - BARGAINING – Unfair bargaining – Authority found no unfair bargaining - Found applicant’s product recipe or storage and packaging of product not sufficiently exclusive to attract proprietary interest – Found alternatively, if applicant had proprietary interest, EA’s restraint of trade clause unreasonable and unenforceable - BREACH OF CONTRACT – PENALTY – Found applicant breached EA when gave two weeks’ notice however had genuine mistaken belief that EA notice period unenforceable - $500 penalty appropriate - Chef |
| Abstract | Respondent employed as chef. Respondent resigned and soon began employment with applicant’s competitor (“T”). Applicant claimed respondent breached restraint of trade clauses and agreed notice period in parties’ employment agreement (“EA”). Applicant sought penalty for respondent’s alleged breach of notice period. Applicant sought to recover losses from alleged breach. Respondent claimed subject to unfair bargaining when negotiated EA and therefore EA unenforceable or alternatively restraint of trade clauses unenforceable. Respondent claimed applicant ought to have known respondent unable to understand EA due to limited English, relied on applicant director’s (“S”) advice and did not have sufficient information or opportunity to seek independent advice before agreed to EA. Parties negotiated terms of employment in Hindi over phone calls before respondent sent copy of EA. Respondent denied obtained confidential information relating to production of applicant’s products.;AUTHORITY FOUND –;BARGAINING: As respondent’s curriculum vitae (“CV”) in English, CV stated English one of respondent’s languages and parties’ emails in English, applicant unaware respondent had limited English. No evidence applicant knew or ought to have known respondent relied on applicant’s advice before accepted EA. S discussed EA in detail with respondent. Respondent able to and advised of right to seek independent advice before agreed to EA. No unfair bargaining.;RESTRAINT OF TRADE: Applicant’s product recipe or storage and packaging of product not sufficiently exclusive to attract proprietary interest. Alternatively, if applicant had proprietary interest, EA’s restraint of trade clause unreasonable and unenforceable. Modifications to clause required to protect applicant’s proprietary interest in product considerable and could create further issues. Authority declined to modify clause.;BREACH OF CONTRACT – PENALTY: S did not tell respondent only two weeks’ notice sufficient. Excluding restraint of trade clause, parties’ EA enforceable. Specified notice period could not be overturned by notions of what might be reasonable in particular circumstances. Applicant breached EA when gave two weeks’ notice however had genuine mistaken belief that EA notice period unenforceable. $500 penalty appropriate. No evidence sufficient link between respondent’s breach and applicant’s losses. |
| Result | Application partially granted ; Penalty ($250)(payable to Crown) ($250)(payable to applicant) ; Costs reserved |
| Main Category | Penalty |
| Statutes | ERA s63A;ERA s68;ERA s68(2)(d);ERA s69;ERA s133;ERA s134;ERA s135;ERA s135(2);Illegal Contracts Act 1970 s8 |
| Cases Cited | Airgas Compressor Specialists Ltd v Bryant [1998] 2 ERNZ 42;Blackmore v Honick Properties Ltd (2011) 9 NZELC 93,980;Brighouse Ltd v Bilderbeck [1993] 2 ERNZ 74;Nedax Systems NZ Ltd v Waterford Security Ltd [1994] 1 ERNZ 494;Otago Clerical Workers IUOW v Mcleod Bros Ltd [1988] NZILR 1308;Ruapehu District Council v Northern Local Government Officers Union unreported, Castle J, 16 November 1992, WEC54/92;Warmington v Affco New Zealand Ltd (2012) 9 NZELR 287 |
| Number of Pages | 23 |
| PDF File Link: | 2012_NZERA_Wellington_76.pdf [pdf 268 KB] |