Is restraint of trade enforceable in New Zealand?
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Is restraint of trade enforceable in New Zealand?
For an employer to enforce a restraint of trade there must be a specific restraint of trade clause in the employment agreement. Even if there is such a clause in the employment agreement, it may not be enforceable. It is very important for the conditions of the clause to be reasonable.
What is considered restraint of trade?
A restraint of trade is any activity that tends to limit a party’s ability to enter into transactions. The term is most commonly used in the context of government antitrust regulation.
What is unreasonable restraint of trade?
Unreasonable restraint of trade is defined as such business activities, by which any enterprise, in concert with other enterprises, mutually restricts business activities, thereby causing a substantial restraint of competition in any particular field of trade4.
When a business is sold what happens to the employees NZ?
When selling your business, the purchaser may communicate with you that they will not be retaining your staff. In that case, you will need to pay out your employees’ wages/salaries, PAYE, holiday and any other leave entitlements up until settlement.
How enforceable is a restraint of trade?
When are restraints of trade enforceable? The general position is that restraint clauses are void unless the employer can justify that the restraint is reasonably necessary to protect the employer’s legitimate business interests.
What types of contracts involve an unreasonable restraint of trade?
For instance, two businesses agreeing to fix prices in order to put another competitor out of business is an illegal restraint of trade. Other examples include creating a monopoly, coercing another party to stop competing with your business, or unlawfully interfering with a business deal (see Tortious Interference).
What happens if the company I work for is sold?
Although there will be new owners of the business, the identity of your employer will essentially stay the same, and your employment will continue as normal.
What happens to my staff if I sell my business?
The employees’ jobs usually transfer over to the new company; Their employment terms and conditions transfer; and. Continuity of employment is maintained.
Can I sue for restraint of trade?
The federal Sherman Antitrust Act of 1890 makes it illegal to participate in unreasonable economic restraints. In fact, some state laws consider restraint of trade to be a crime, and any party that participates in the restraint can be sued in civil court.
What happens if you breach restraint of trade?
If the restraint is upheld (and that is a big if) and you breach the clause, you can find yourself subject to an injunction or even a judgment for damages in favour of your former employer.
How do I get around restraint of trade?
4 Smart Ways To Deal With Your Restraint of Trade
- Obtain Legal Advice. Yes, this one sounds obvious.
- Review the Clause Carefully. Restraints of trade are not a ‘black and white’ area of the law.
- Don’t Confuse it With Other Contractual Clauses. “I only had a short restraint period and now it’s over!
- Advise Your New Employer.
What happens to employees when another company takes over?
On average, roughly 30% of employees are deemed redundant after a merger or acquisition in the same industry. In such situations, most people tend to fixate on what they can’t control: decisions about who is let go, promoted, reassigned, or relocated.
Do I have to accept a job if my company is sold to new owners?
If the take-over is by way of a share purchase, your employment will continue as it was before. Although there will be new owners of the business, the identity of your employer will essentially stay the same, and your employment will continue as normal.
How long is a reasonable restraint of trade?
Considering the application takes longer than 12 months to be heard by a judge in the Labour Court, the restraint (only valid for 12 months) would be moot, the Court heard the application on an urgent basis.
How long is a restraint period?
three to twelve months
Usually, time periods of restraints will be limited to three to twelve months, but recent case law indicates that the courts are open to enforcing longer time periods in particular circumstances.
Are employment restraints enforceable?
Post-employment restraints are presumed to be unenforceable unless the employer seeking to enforce a restraint is able to show that the restraint was reasonable at the time it was agreed to.
