Case Update – Enforceability Of Non-Compete Clauses

The General Principle

Non-compete provisions which restrict a former employer for working for a competitor is not uncommon but for it to be considered enforceable it is essential that the restriction does not go any further than necessary to protect a legitimate business interest and is not an unfair restraint of trade. It is also important that the clause is properly drafted and is clear.

Boydell v NZP Ltd

In the recent case of Boydell V NZP, the Court of Appeal considered a decision made by the High Court to delete wording from a non-compete clause in order to make it enforceable.

Dr Boydell was a senior employee of NZP and was employed as Head of Commercial – Specialty Products. The non-compete clause restricted Dr Boydell from being involved in any activities that would compete with the business of NZP (or any group companies) for a period of 12 months from the termination of his employment.