Employers
Restraint of trade
A restraint of trade clause prevents former employees from working in similar businesses in a way that may affect your business.
When you can include a restraint of trade in an employment agreement
You can include a restraint of trade clause in your employee’s A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
2 main types of restraint of trade clause
The 2 main types of restraint of trade clause are:
- non-competition - where a former employee is prevented from working in a similar field to your business
- non-solicitation - where a former employee is allowed to take another job in the same or similar industry but is restricted from contacting your clients about their new business.
You can find a restraint of trade clause in our Employment agreement builder.
Employment agreement builder - business.govt.nz(external link)
How to protect confidential information
Your employees must act in An underlying principle in employment law which requires employers and employees to deal with each other honestly, openly, and in a fair and timely way.
Make sure your employees know what information is confidential and how to keep it safe.
Some employers add a confidentiality clause to A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
If you include a confidentiality clause, when your employee leaves remind them that the confidentiality clause continues after they’ve stopped working for you. There may be consequences if they use or share confidential information.
Employment agreement builder - business.govt.nz (external link)
Simple steps to protect your intellectual property - business.govt.nz(external link)
What happens if an employee breaches a restraint of trade clause
If an employee An act of breaking a law, promise, agreement or relationship. The tribunal established under the Employment Relations Act to resolve employment relationship problems. The court that hears and determines cases relating to employment disputes. It also hears challenges to determinations of the Employment Relations Authority and questions of interpretation of law. It has initial jurisdiction over matters like strikes and lockouts.
You may also be able to ask for damages to cover any loss they may have experienced because of the breach, and penalties for the breach of contract or a breach of the duty of An underlying principle in employment law which requires employers and employees to deal with each other honestly, openly, and in a fair and timely way.