As a professional, I understand the importance of incorporating keywords to ensure that articles are optimized for search engines. In this article, we will be discussing the topic of restraint of trade contractors in New Zealand.
Restraint of trade clauses are common within contracts, particularly in industries where competition is high. Essentially, these clauses limit an individual`s ability to work for another company or start their own business for a certain period of time after leaving their current role. This is done to protect a company`s intellectual property and prevent employees from taking clients or confidential information with them when they leave.
In New Zealand, restraint of trade clauses are legal, but there are certain limitations to what can be included within them. According to the Employment Relations Act 2000, a restraint of trade clause must be reasonable in terms of duration, geographic coverage and scope of activities covered.
Duration: A restraint of trade clause cannot be so long that it restricts an employee`s ability to find work. In most cases, a restraint period of 6-12 months is considered reasonable.
Geographic coverage: The clause should only cover the specific area where the company operates. For example, if the company is based in Auckland, a restraint of trade clause that covers the entire country would not be considered reasonable.
Scope of activities covered: The clause should only cover activities that the employee was directly involved in during their time with the company. It cannot be so broad that it prevents the employee from working in their chosen field.
It is important for both employers and employees to carefully consider the terms of a restraint of trade clause before agreeing to it. Employers should ensure that the clause is reasonable and necessary to protect their business interests, while employees should understand the potential limitations it may have on their future career prospects.
In conclusion, restraint of trade clauses are a legal and common aspect of contracts in New Zealand. However, it is important to ensure that they are reasonable in terms of duration, geographic coverage and scope of activities covered. Both employers and employees should carefully consider the potential implications of such clauses before agreeing to them.