| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | CA 125/10 |
| Hearing date | 1 Sep 2009 - 2 Sep 2009 (2 days) |
| Determination date | 18 May 2010 |
| Member | P Montgomery |
| Representation | D Alderslade, M Wisker ; G Malone |
| Location | Nelson |
| Parties | Bay Audiology Ltd v Breems & Anor |
| Other Parties | Mager |
| Summary | RESTRAINT OF TRADE – Applicant claimed respondents breached restraint of trade in employment agreement (“EA”) – Applicant did not advise first respondent under restraint of trade before employment commenced – First respondent subsequently received written EA with restraint of trade clause – First respondent resigned over disputes regarding employment duties – First respondent established competing company (“HP”) – Applicant claimed first respondent breached EA and sought penalties and damages – First respondent argued restraint of trade clause unreasonable as applicant commenced employment without knowledge clause applied – Argued no consideration given – Argued scope of clause exceeded scope of employment duties – Authority found restraint unreasonable as applicant advised first respondent under restraint after employment commenced therefore no consideration given – Found scope of restraint unreasonably wide compared to first respondent’s employment position - Found however, first respondent breached obligations of fidelity as established HP before garden leave ended – Found applicant entitled to penalties for breach - Second respondent employed as Audiologist – EA provided second respondent restrained from entering competition with applicant for five months – Second respondent resigned over dispute whether applicant obligated to pay bonus – Second respondent accepted involvement with HP – Found restraint reasonable as second respondent’s position senior – Found no geographical restrictions in non-competition setting – Found second respondent breached obligation of fidelity by accepting involvement with HP in breach of EA – Found however, second respondent entitled to bonus as consideration for restraints - No objection made against applicant placing respondents on garden leave – PENALTY – Authority found applicant entitled to penalties against respondents for period in which they breached EA - COUNTERCLAIM - UNJUSTIFIED DISMISSAL – Constructive dismissal – First respondent counterclaimed constructively dismissed as applicant breached obligations to provide adequate work pursuant to EA - Conflict of evidence whether first respondent employed in sales role or assistant audiologist – First respondent commenced employment and required to carry out sales duties – First respondent continuously claimed to applicant entitled to assist audiologists pursuant to EA – First respondent advised applicant dissatisfied with role and failure to provide audiologicial duties breached EA – First respondent resigned – Authority found conflicting job descriptions regarding first respondent’s duties – Found first respondent’s business card provided title “Audiologicial Assistant” – Found first respondent entitled to challenge applicant’s insistence role in sales – Found entitled to repudiate EA when applicant offered three hours audiological work per day – Found resignation reasonably foreseeable – Constructively dismissed – Second respondent claimed constructively dismissed following applicant’s refusal to pay bonus – EA provided entitled to annual bonus – Second respondent disputed bonus scheme and made new proposal – Applicant on leave therefore did not respond to proposal – Second respondent resigned – Authority found no evidence applicant rejected proposal immediately – Found second respondent’s resignation pre-empted – No constructive dismissal – Parties directed to mediation to agree on penalties and payments based on Authority’s findings |
| Result | Applications granted (Breach of fidelity - First and second respondent) (Counterclaim – Unjustified dismissal)(First respondent) ; Applications dismissed (Restraint of trade - First respondent) (Counterclaim – Unjustified dismissal)(Second respondent) ; Parties directed to mediation ; Penalty (Quantum to be determined) ; Bonus payment (Quantum to be determined)(Second respondent) ; Costs reserved |
| Main Category | Restraint of Trade |
| Number of Pages | 13 |
| PDF File Link: | ca 125_10.pdf [pdf 40 KB] |