A National infrastructure company’s bid for an interim injunction against a Central Otago man and his new employer for breaching restraint of trade clauses has failed.
An Employment Relations Authority (ERA) decision says InterGroup Ltd claimed a former employee, Troy Andersen, breached restraint of trade provisions in his employment agreement by working for rival company Pipe Vision NZ Ltd at its Cromwell branch.
It also claimed Mr Andersen solicited its employees and customers, and that Pipe Vision induced him to breach the restraints.
In the decision, ERA member Peter van Keulen said the two companies were competitors in the pipe cleaning and hydro-excavation industry throughout New Zealand.
When InterGroup hired Mr Andersen as a driver-operator in 2021, his employment contract had provisions aimed at preventing him from working for any competitor for 12 months after its termination, and from soliciting any InterGroup employee, supplier or customer indefinitely.
In his evidence, Mr Andersen said he did not have alternative employment organised when he resigned from InterGroup last July, but was offered a job as Pipe Vision’s South Island regional manager the following month.
InterGroup claimed he contacted one of its major customers within a week of starting his new job, and the customer switched to Pipe Vision soon afterwards.
He contacted other InterGroup customers in an attempt to drum up work for his new employer, the company claimed.
It also suspected him of recruiting another of its employees, while a current employee said Mr Andersen had told him "if he was looking for a job then he should give him a call".
Mr Andersen and Pipe Vision denied the claims.
Mr van Keulen said the timeframes of the restraints on Mr Andersen — 12 months for the non-compete restraint and indefinitely for the non-solicitation restraint — were excessive, and their scope and geographical coverage were too wide.
To make the restraints reasonable, they needed significant modification in all three respects, and he did not have the legal authority to do that.
He reached a similar conclusion about InterGroup’s claims that Pipe Vision had induced the alleged breaches and interfered with the contract between InterGroup and Mr Andersen.
Based on the evidence before him, InterGroup’s claims were "weak", and he declined the injunction.
