restraint of trade – learnings from the Tova O’Brien case

February 26th 2022

Tova O’Brien argued her new role as a radio show host captured a substantively different audience to her work as a political editor and therefore would not be ‘competition’ for the purposes of her restraint of trade.

Her old employer, Discovery, argued her new role appealed to a significant portion of their target market, namely the younger generation of consumers who appear to switch between breakfast radio and TV media based on their preference of hosts.

In the determination, the ERA ruled in favour of Discovery and the 3 month restraint of trade was upheld.

Discovery was able to show that it has legitimate proprietary interests in business relationships built up by Ms O’Brien, goodwill in the New Zealand marketplace, and confidential information, including Discovery’s editorial priorities and future plans.

So, some key points to note when thinking about a restraint of trade clause:

• They CAN be enforceable – if you can prove the provision is reasonable
• The term and geographic coverage need to be fair – not wider than is necessary to protect the party it was designed to protect.
• Specify what constitutes ‘competition’, with a link to “trade secrets” that can be regarded as the employer’s property and, therefore, must be protected.

Tags: hr policies

Category: legislation