Wednesday, March 09, 2022

Ending restraint of trade clauses

Back in January journalist Tova O’Brien became the public face of "restraint of trade" clauses when she was banned from working for two months. O’Brien was a high-paid journalist, so it mattered less, but the case highlighted the growing use of these clauses by New Zealand bosses eager to retain a captive labour force. Now Labour's Helen White has put up a bill which would effectively gut them.

The Employment Relations (Restraint of Trade) Amendment Bill would do three things: limit the use of these clauses to cases where employers actually have a "proprietary interest" which is specified in the contract, make them completely ineffective where people are paid less than three times the minimum wage (so around $125,000 a year, assuming a 37.5 hour working week), and where they are effective, require employers to continue to pay the worker at least half their regular salary for the duration. So it should end the bullshit of trying to lock in low-paid workers, while imposing a real cost on employers of high-paid workers who want to do so. The requirement to specify the interest supposedly protected (and for restrictions which are no greater than necessary) will also make such clauses far easier to challenge.

This bill looks good and necessary, and hopefully it will be drawn from the ballot soon.