Quick answer, usually no. Most blanket non-competes are unenforceable unless your old employer can prove the restraint is genuinely reasonable, and even then a court can cut it down.
Key takeaways
- Restraints of trade, including non-compete clauses, start out unenforceable as against the public interest. The employer has to prove theirs is reasonable, not you.
- A court can rewrite an overly broad restraint rather than strike it out, cutting the duration, the area or the scope down to what is reasonable. That power is in section 83 of the Contract and Commercial Law Act.
- Many restraints are bluffs that would never survive court, but some well-drafted ones are enforced, so read your exact clause and get advice before you rely on either.
- Six months is the usual ceiling for an ordinary employee, up to about 12 months for senior staff or a business sale. Non-solicitation of clients is far easier to enforce than a blanket non-compete.
- Parliament looked at banning non-competes for lower-paid workers, but that bill stalled and is not law as at July 2026.
Are you the employee, or the employer? Workers with a clause hanging over a new job should start at when a restraint is enforceable and what to do if you are bound. Employers drafting one should jump to writing a restraint that holds up.
In this guide
What a restraint of trade is
A restraint of trade is a clause that limits what you can do after you leave a job. The common ones are a non-compete, barring you from working for a competitor or starting a competing business, a non-solicitation clause, stopping you approaching your old employer’s clients, a non-poaching clause, stopping you taking former colleagues with you, and a confidentiality clause protecting trade secrets. A non-compete is a restraint of trade, the phrase people search for and the hardest kind to enforce.
The starting point of the law is friendlier to workers than most people realise. A restraint of trade is presumed unenforceable, as contrary to the public interest in people being free to earn a living, unless the employer can prove it is reasonable. The burden sits on them, not on you, and that single fact is why so many clauses that look intimidating on the page would collapse in court.
When a restraint is enforceable
To enforce a restraint, an employer has to clear two hurdles. First, they must have a legitimate proprietary interest genuinely worth protecting, and New Zealand courts recognise a limited list, confidential information and trade secrets, established client and business connections, and the goodwill of the business. A general wish to avoid competition is not a protectable interest, competition is the thing the law wants to preserve.
Second, the restraint must be no wider than reasonably necessary to protect that interest, in its scope of activities, its geographic reach and its duration, and it must not be contrary to the public interest. The leading cases, including the Court of Appeal in Skids Programme Management v McNeill and the more recent O’Brien v Discovery NZ, show the two sides of this. A restraint tied tightly to real client relationships or genuine confidential information can be enforced. One that simply tries to keep a former employee out of the industry cannot.
The factors courts weigh
- Your seniority and access. A senior person with real client relationships and confidential knowledge can be restrained more than a junior with neither. The clause has to match your actual role, not a template.
- Duration. Six months is about the usual ceiling for an ordinary employee. Up to 12 months can be justified for senior staff or when a business has been sold, and anything beyond a year is unusual and hard to defend.
- Geography and scope. A nationwide ban for a locally-based role, or a bar on an entire industry when only a niche is at risk, is the kind of overreach that gets a restraint cut down or thrown out.
- Whether you got anything for it. A restraint agreed at the start, as part of the deal for the job, stands on firmer ground than one bolted on mid-employment with nothing given in return. Being asked to sign a new restraint for no pay rise, promotion or payment is a real weakness a court will weigh, though it is not automatically fatal.
How courts can rewrite a restraint
Here is the point most guides miss, and it cuts both ways. If a court finds a restraint unreasonable, it does not have to simply throw it out. Under section 83 of the Contract and Commercial Law Act 2017, previously section 8 of the Illegal Contracts Act 1970, the court, or the Employment Relations Authority, can do one of three things, delete the offending part and enforce the rest, modify the restraint so it becomes reasonable and enforce it as modified, or decline to enforce it altogether where cutting it down would unfairly rewrite the bargain. The Act even lets the court modify a clause where that cannot be done just by deleting words.
For an employee this means an overreaching 24-month nationwide restraint might be read down to six months in your city rather than vanishing. For an employer it is a reason not to overreach, but also not fatal if you slightly do. Nobody should assume an unreasonable-looking clause is simply void, that is a question for advice, not hope.
Non-solicitation, non-poaching and garden leave
Not all restraints are equal in the eyes of a court. A clause stopping you from soliciting your old employer’s clients, or poaching their staff, is much more readily enforced than a blanket non-compete, because it maps directly onto a real proprietary interest, the client connections and the workforce, without shutting you out of your trade entirely. If you have to live with a restraint, a tight non-solicitation clause is far less damaging to your career than a non-compete, and far more likely to bind you.
Garden leave is the other lever. If your employer keeps you employed but away from work during your notice period, that time on garden leave generally counts against any post-employment restraint, reducing what is left of it, because the interest has already been protected. In one case involving Air New Zealand, six months of garden leave was held to have done the protective work a further restraint was seeking.
What to do if you are bound
- Read the exact clause. The wording, the stated duration, the area, and precisely what it bars. Vague or sweeping drafting is often the weakness that sinks it.
- Get advice on your specific clause. Restraint cases turn on their facts, so a lawyer or Community Law can tell you fairly quickly whether yours is a paper tiger or a real problem.
- Remember the employer must act. A restraint does not enforce itself. To stop you, the old employer usually has to go to court for an injunction, which costs them money and requires them to prove reasonableness, and many never do.
- Consider negotiating a release. Employers often agree to waive or narrow a restraint, especially if you are not really a threat to a protectable interest, and your new employer may help.
- Do not just ignore it. A genuine, well-drafted restraint can be enforced, and breaching one can expose both you and a knowing new employer. Weigh the risk with advice rather than a hunch.
If you were engaged as a contractor rather than an employee, the reasonableness test is applied in much the same way, but the forum can differ, our contractor or employee guide covers why your status matters.
Writing a restraint that holds up
If you run a business, the way to make a restraint stick is restraint. Identify the actual interest you need to protect, your client relationships, specific confidential information, and draw the clause narrowly around it, the shortest duration that does the job, the smallest area, and the narrowest activity. A tailored six-month non-solicitation aimed at your key clients will protect you far better than a two-year nationwide non-compete that a court will gut. Give real consideration for a restraint added mid-employment, a pay rise, a bonus or a genuine payment, and put it in writing. Overreaching does not just risk the clause, it can leave you with nothing enforceable at the moment you need it.
Is the law changing
There has been talk of restricting non-competes, so it is worth being precise about where things actually stand. A member’s bill, the Employment Relations (Restraint of Trade) Amendment Bill, would have banned restraints for lower-paid workers and capped them for others. It passed its first reading in July 2023 and went to select committee, which reported back in May 2024, but as at July 2026 it has not had a second reading and is not law, and it is unlikely to progress under the current government.
Do not confuse that stalled bill with the Employment Relations Amendment Act 2026, which did become law in February 2026. That Act brought in the contractor gateway test and other changes, but it did nothing to restraints of trade. For now, the common-law reasonableness test in this guide is the whole of the law. Australia has announced a ban on non-competes for workers under a set income from 2027, which may renew the debate here, but it is not New Zealand law.
Common questions
Is a non-compete enforceable in NZ
Sometimes, but it starts out unenforceable and the employer must prove it is reasonable, protecting a genuine interest and no wider than necessary. Blanket non-competes that just block competition usually fail, while narrow, well-drafted ones tied to real client relationships or confidential information can be enforced.
How long can a restraint of trade last
Six months is about the usual limit for an ordinary employee, up to 12 months for senior staff or when a business is sold. Longer than a year is unusual and hard to justify, and a court can cut an over-long restraint down to a reasonable period.
Can my employer stop me working for a competitor
Only if they have an enforceable non-compete, which many do not. To actually stop you they usually have to get a court injunction and prove the restraint is reasonable. If the clause is overbroad, or you hold no real confidential information or client relationships, it may not bind you at all, but get advice before you rely on that.
Do I get paid during a restraint
Not automatically. Ordinary post-employment restraints are usually unpaid, which is part of why long ones are hard to justify. Garden leave is different, you stay employed and paid during it, and that time generally reduces any further restraint.
Can a restraint be added after I started
It can be proposed, but a restraint added mid-employment with nothing given in return, no pay rise, promotion or payment, stands on much weaker ground than one agreed at the outset. You do not have to agree to a new restraint, and how it was introduced is something a court weighs.
What is the difference between non-compete and non-solicitation
A non-compete tries to stop you working in the field at all, which is the hardest restraint to enforce. A non-solicitation clause only stops you approaching your old employer’s clients or staff, which is narrower, maps to a real interest, and is much more readily upheld.
Where to get free help
- Employment New Zealand, 0800 20 90 20, employment.govt.nz, official guidance and free early resolution and mediation.
- Community Law, communitylaw.org.nz, free advice on whether your clause is likely enforceable.
- Citizens Advice Bureau, 0800 367 222, cab.org.nz, first-stop help and referrals.
- An employment lawyer, worth it fast if an injunction is threatened or a new job is on the line, many offer a fixed-fee first opinion.
If the real issue is how your job ended, our guides to unfair dismissal and redundancy rights cover that ground.
Have you had a restraint of trade tested, waived or enforced? What happened when you pushed back? Share your experience in the comments.
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