| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | [2013] NZERA Christchurch 92 |
| Hearing date | 5 - 6 Nov 2012 |
| Determination date | 27 May 2013 |
| Member | C Hickey |
| Representation | J Singleton ; J Goldstein, L Ryder |
| Location | Christchurch |
| Parties | Leftclick Ltd v Thomas |
| Summary | RESTRAINT OF TRADE – PENALTY – Applicant sought penalty for respondent’s breach of restraint of trade (“ROT”) and confidentiality clauses in employment agreement – Whether restraint of trade and confidentiality clauses discussed at interviews – Whether respondent passed details about applicant’s client to new employer – Six month ROT – Applicant developing new software – COUNTERCLAIM – UNJUSTIFIED DISADVANTAGE – UNJUSTIFIED DISMISSAL – Constructive Dismissal – Respondent claimed unjustifiably disadvantaged by late payment of salary and unjustifiably dismissed by applicant – Applicant unable to pay respondent’s salary – Managing director paid salaries from personal account – Whether late payments discussed at staff meetings – COUNTERCLAIM – ARREARS OF WAGES – Respondent sought arrears of wages – Whether respondent entitled to bonus payment for introducing staff member to applicant – COUNTERCLAIM – PENALTY – GOOD FAITH – Respondent sought penalties for applicant’s breach of employment agreement and breach of good faith – Business development manager |
| Abstract | AUTHORITY FOUND –;RESTRAINT OF TRADE – PENALTY: Unlikely respondent did not read employment agreement carefully before signing. Respondent understood application of ROT. Applicant had interest in protecting confidential information. Interest capable of lawful protection. No evidence respondent breached duty of confidentiality. Applicant had certain way of doing business but no unique software developed at time restrictive covenants entered into. No proprietary interest in software requiring protection. Respondent not exposed to or aware of any trade secret or intellectual property in which applicant had proprietary interest. ROT not necessary and therefore unenforceable. No penalty.;COUNTERCLAIM – UNJUSTIFIED DISADVANTAGE – UNJUSTIFIED DISMISSAL: Failure to pay base salary payments on time breach of employment agreement. Respondent not present at every staff meeting regarding late payments. Respondent affirmed employment agreement by failing to protest first five late payments. Resignation not foreseeable after sixth late payment. Respondent left because of new role. No constructive dismissal. Grievances regarding some late payments not able to be considered as not raised within 90 days. Respondent economically disadvantaged by late payment of salary. Failure to pay salary on time and in full not fair and reasonable. Respondent unjustifiably disadvantaged by failure to pay salary on time. REMEDIES: Award of compensation for humiliation etc discretionary and appropriate to consider remedies under respondent’s penalty claim.;COUNTERCLAIM – ARREARS OF WAGES: No limitation that bonus not payable if new employee introduced through connection with current client of applicant. No evidence senior team not entitled to bonus. Respondent used personal initiative to introduce new employee. Respondent entitled to bonus. Applicant to pay respondent $2,500 arrears of wages.;COUNTERCLAIM – PENALTY – GOOD FAITH: Payment of salary fundamental term of employment agreement. $2,100 penalty appropriate for breach of employment agreement. Decisions to partially pay or late pay applicant’s salary not likely to adversely affect continuation of respondent’s employment. Applicant made staff aware of cash flow problems. Managing director offered to reimburse staff for expenses incurred due to late payment. No breach of good faith. No penalty for breach of good faith. |
| Result | Applications granted (counterclaim – unjustified disadvantage)(counterclaim – arrears of wages)(counterclaim – penalty) ; Arrears of wages ($2,500) ; Penalty ($2,100)(payable to respondent) ; Applications dismissed (restraint of trade – penalty)(counterclaim – unjustified dismissal) ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s4;ERA s4(1);ERA s4(1A)(b);ERA s4(1A)(c);ERA s4A;ERA s103(1)(b);ERA s103A;ERA s134;ERA s135;ERA s174;Illegal Contracts Act 1976 |
| Cases Cited | Airgas Compressor Specialists Ltd v Bryant [1998] 2 ERNZ 42;Morgan v Quality Environmental Consulting Ltd unreported, R Arthur, 25 November 2008, AA404/08;NZ Amalgamated Engineering etc IUOW v Ritchies Transport Holdings Ltd [1991] 2 ERNZ 267 |
| Number of Pages | 19 |
| PDF File Link: | PDF file not available for download, please contact us to request a copy. |