Jennifer Mills: Employment specialist on the OECD study raising concerns about the number of jobs covered by restraints of trade

There's concern around restraint of trades being cut and pasted across all levels of the workforce. 

A new OECD study reveals 43% of the country's employees are covered by them – more than the 14 other countries surveyed.  

The study notes it's fair for companies to require employees to wait some time before starting work for competitors, but notes some could be going overboard with prohibitive clauses. 

Employment specialist Jennifer Mills told Mike Hosking most restraints are all the same, and an employer may need to ask the authority to vary the restraint to ensure it's reasonable to uphold. 

But she also believes most Kiwis are pretty savvy when it comes to restraints – most cases are negotiated, and people will often approach their employer directly to find a satisfactory outcome.  

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Episode Transcript

Speaker 1 (00:00):
When you report this morning. This is the OECD. They've
been looking at restraint of trade clauses. It's a fifteen
country study includes US conclusion productivity is being held back
by their over use non solicitation of client causes. Big
deal here apparently covers forty three percent of workers. The
average in the OECD is twenty two. Jennifer Mills, employment
specialist at Jennifer Mills and Associates and as well as Jennifer,

(00:22):
very good morning to you.

Speaker 2 (00:24):
Good morning, Mike.

Speaker 1 (00:25):
Does every professional basically have some sort of restraint of
trade generally?

Speaker 2 (00:30):
Oh, they absolutely would, Mike. Certainly in law you would
see non solicitation and non competition restrictive covenance. And in
your industry, obviously we've got the Tova O'Brien determination where
the authority put miss O'Brien out of work for seven

(00:51):
weeks of her three months non competition restrictive covenant. She's
not the hoste who perhaps might be restrained from longer
temporal period, but it was our high profile decision an
employee employed in a key role. So we are seeing
the non competition restrictive covenants being enforced in New Zealand.

(01:12):
But the reports. Concern, having had a look at it overnight,
was that these restraints are being applied indiscriminately across the workforce,
and that means lower level employees have these restraints included
in their employment agreements and that has a chilling effect,
tending to prevent them from moving on. And that's consistent

(01:36):
with ms White's Private Members Bill seeking to ban restraints
for lower paid workers. We don't see that. We see
employees across New Zealand are pretty savvy with respect to
their knowledge of employment law and their rights, and if
they're not happy with a restraint, they'll approach their employer
directly and seek to negotiate a satisfactory outcome. Most of

(01:58):
these cases negotiate, said Mike. We don't end up in
litigation often, and the resolution usually is by the departing
employee proffering undertakings in respect of confidentiality, intellectual property and
non solicitation. And often that will protect certainly an employer's

(02:20):
legitimate proprietary interests that they have.

Speaker 1 (02:22):
Is there a little bit of cut and paste from
the corporate side of the equation. In other words, if
I do one, I can do them all and just
make it easy on my self administratively speaking, and that
is part of the problem.

Speaker 2 (02:32):
Oh, you're absolutely right. They're all the same, and it
comes down to the pointy end of the relationship, where
an employee is seeking to leave, an employer is seeking
to enforce the restraint and may need to ask the
authority to vary the restraint to ensure that it is
reasonable to uphold.

Speaker 1 (02:53):
All right, nice to talk to Jennifer. Appreciate the expertise.
As always, Jennifer Mills, the employment specialist, Jennifer Mills and Associates.
I don't know that anyone's necessarily change the law as
we understand it.

Speaker 2 (03:02):
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