Jenee Tibshraeny: NZ Herald Wellington business editor on the concerns raised over NZ employment contracts

People are not moving between jobs as seamlessly as they should in a productive economy, thanks to overly restrictive employment contracts.

This is the conclusion reached by the Organisation for Economic Co-operation and Development (OECD), after a major new study spanning 15 countries including New Zealand.

NZ Herald Wellington business editor Jenee Tibshraeny explained further.

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Episode Transcript

Speaker 1 (00:00):
Conserner has been raised about restraints of trade clauses in
New Zealand employment contracts. The OECD has taken a look
at it reckons the restrictive agreements. I mean, people are
not moving between jobs as seamlessly as they could do
and should do in a productive economy. The Herald's Wellington
Business editor Genatibstraney's been looking into this for US hygienae.

Speaker 2 (00:18):
Hi hever sounds like we're using it at kind of
twice the rate of everybody else. Is that about right?

Speaker 3 (00:25):
Not twice the rate, but sort of on par with
some other countries. And the OECD, the OCD is on
this really interesting study and it's the first study I've
seen of the sort that involves New Zealand. And basically
they look at all the different types of clauses and
employment contracts, like non disclosure clauses or restraints of trade

(00:47):
or clauses that say, you know, if you leave, you
can't take colleagues with you, or you can't take clients
with you, or if you leave, you have to repay
the company if it's paid for your training, we have
to repay bonuses, and I mean effectively it's saying that
over time, companies including a lot more of these clauses

(01:08):
in contracts, and if that's the case, it's harder for
you to move jobs. And if there's less mobility, then
that really impedes wage growth and also productivity. And I
think that's a fair, fair argument, because you know, the
thing that creates productivity is if resources are allocated to
where they can be used most efficiently. But if you're

(01:28):
stuck in a job because of some of these clauses,
then that really does impede productivity and efficiency. That's the
aiglement at least.

Speaker 1 (01:36):
I heard Jennifer Mills on with Mike Costking this morning,
obviously one of our most high profile employment lawyers, and
the point that she made, I think, is that it
is okay for very senior staff to be on these
kinds of contracts. And I don't think any of us
would disagree with that. The problem is that we're putting
junior staff on these contracts now, and I know junior
staff who want it. And that's silly, isn't it?

Speaker 3 (01:58):
Totally? And that's the point that the oe CD raises.
It says that yes, it's sure, it's sure. Thing you know,
you don't want to have your top staff who have
you know, trade secrets, moving and sharing your company's secrets
with competitors or people in the know. But US saying
that these clauses are increasingly being used for low level
employees or companies are just having sort of blanket clauses

(02:21):
regardless of what your role is in the company, and.

Speaker 2 (02:24):
You sort of have to negotiate yourself.

Speaker 3 (02:28):
Exactly, and and you know, if you are a more
junior staff, but then that's tough to go in there.
You're just grateful to have a job. Another thing that
they pointed out was that they think there could be
some sort of collusion happening between companies where they companies
in the same sector get together and they sort of
wage fix or they agree with each other that they

(02:49):
won't poach staff off each other. And and you know,
because if you poach, if you're poaching staff, then that's
how how wages go up. So of course you know
that's that's not okay. So it's pretty hard to prove,
but they've said that about fifty three percent of firms
surveyed in New Zealand reported knowledge of this type of

(03:11):
thing happening, of non poaching or wage fixing occurring in
the industries. So another bad sign.

Speaker 2 (03:18):
Now, doesn't Helen White have a bill to affect all
of this?

Speaker 3 (03:24):
I have heard she does, but I'm not I'm not
across it. I'm not across it.

Speaker 2 (03:29):
There is a bill, isn't there? Because it's making the
supper mind?

Speaker 1 (03:32):
You know, did I have a dream about Helen White
having a bill about restrange restraint of trade clauses?

Speaker 3 (03:37):
I don't know if that's something we should get into either.
I'm not too sure. Yeah, yeah, but I will say
that that the OECD does say it's looked at different
like regulatory frameworks around these clauses in different countries, and
it says that the regulatory framework around New Zealand in
this area is the most employer friendly of all all

(04:00):
the countries that's looked at. H So, so that that
does suggest if you if you do find yourself in
a sticky situation in this regard, you know you might
face face an uphill battle if you are an employee.

Speaker 1 (04:14):
All right, thank you very much, Janey, I really am
really enjoyed out chat tonight. Genative Training. The Herald's Wellington
Business editor. I furiously googled, so I was like, surely
to God, I don't want to leave you with the
impression I've been having weird dreams about Helen White and
pieces of legislation, though she does.

Speaker 2 (04:29):
In fact, I wasn't making it up. For more from
Heather Duplessy Allen Drive, listen live to news Talks.

Speaker 1 (04:35):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio.