Judge sees apparent drafting error in employment agreement’s non-compete clause
The New Zealand Employment Court has set aside an Employment Relations Authority (ERA) determination that issued an interim injunction imposing certain post-employment restraints of trade based on specific clauses of the parties’ employment agreement.
In Botha v GPC Asia Pacific Limited [2026] NZEmpC 229, the defendant terminated the plaintiff’s employment. Under the interim injunction granted by the ERA, the plaintiff could not:
Challenging the ERA determination, the plaintiff asked the Employment Court to declare the restraint provisions entirely void and unenforceable.
Alternatively, the plaintiff sought to reduce the scope of the provisions to make them reasonable and to consider that he was on garden or sick leave for his notice period and was thus out of the market.
On the other hand, the defendant wanted to enforce the provisions fully. Alternatively, the defendant proposed an amended geographical scope if the court would modify the provisions.
The Employment Court set aside the ERA determination.
Instead, the court issued an order restraining the plaintiff from approaching, soliciting, or persuading any customer of the defendant, with whom he had dealings on the defendant’s behalf in the 12 months before the end of his employment, to stop doing business or to reduce the amount of business normally done with the defendant.
Beyond this order, the court refused to enforce the relevant clause of the employment agreement on an interim basis.
First, the Employment Court found a serious question for trial upon applying the necessary threshold. The court did not consider the defendant’s claim, which sought to enforce an express contractual provision, frivolous or vexatious.
However, the court pointed out that post-employment restraints of trade were prima facie void and unenforceable except if the restraints were reasonable in the context and seeking to safeguard a legitimate proprietary interest.
The court took issue with the reasonableness of some terms here.
Moreover, given an apparent drafting error, the court ruled that the relevant non-compete clause of the employment agreement appeared to prevent the plaintiff from working for an unrelated third party’s competitor, rather than barring him from working for the defendant’s competitor.
Second, the court ruled that the balance of convenience did not favour granting the defendant’s requested orders. In its assessment, the court weighed the following factors:
Next, upon considering the defendant’s arguably legitimate proprietary interests, the court held that a compromise and a modification of the relevant clause’s terms would serve the interests of justice.
Lastly, the court told the parties to agree on costs or to file cost memoranda.
Here are some other recent decisions by the Employment Court of New Zealand.
On 24 August 2026, the court struck out a challenge brought by a woman adjudicated bankrupt on 12 February 2026 for lack of standing and denied her interlocutory applications for a stay and interim non-publication.
On 5 August 2026, the court issued an interim injunction in favour of an employee suspended by the Public Service Commission, given the proceedings’ novel and complex issues in the intersection of employment law, natural justice, and national security.
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