Non-Compete Agreement (New Zealand)
Restraint of Trade Agreement — Contract and Commercial Law Act 2017 (CCLA)
This Non-Compete Agreement (Restraint of Trade Agreement) (the “Agreement”) is entered into as of [Effective Date] (the “Effective Date”), by and between:
[Employer Name] (NZBN: [Employer NZBN]), with its principal place of business at [Employer Address], [Employer City], [Employer Region] [Employer Postcode], New Zealand (the “Employer”); and
[Employee Name], of [Employee Address], [Employee City], [Employee Region] [Employee Postcode], New Zealand, currently holding the position of [Employee Title] (the “Employee”).
The Employer and the Employee are collectively referred to as the “Parties” and individually as a “Party.”
RECITALS
WHEREAS, the Employer carries on a business that involves proprietary information, trade secrets, confidential business strategies, client relationships, and specialised knowledge and goodwill;
WHEREAS, the Employee has been or will be employed by the Employer in the position of [Employee Title], which provides the Employee with access to the Employer’s confidential information, client relationships, business methods, and other proprietary materials;
WHEREAS, the Employer has legitimate protectable business interests, including: [Protected Interests];
WHEREAS, the Employee acknowledges that the restraints contained in this Agreement are reasonable in scope, duration, and geographic extent, and go no further than is reasonably necessary to protect the Employer’s legitimate business interests;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the Parties agree as follows:
1. CONSIDERATION
In exchange for the Employee’s agreement to the restraints contained herein, the Employer shall provide the Employee with the following consideration: [Consideration]. The Employee acknowledges that this consideration is adequate and sufficient to support the obligations and restraints set forth in this Agreement.
2. RESTRAINT OF TRADE
2.1 Restraint Period. The Employee agrees that for a period of [Restraint Duration] following the termination of the Employee’s employment with the Employer, whether such termination is voluntary or involuntary, with or without cause (the “Restraint Period”), the Employee shall not, directly or indirectly, engage in any of the restricted activities described in this clause.
2.2 Geographic Area. The restraints set forth in this Agreement shall apply [Geographic Scope] (the “Restricted Area”).
2.3 Restricted Activities. During the Restraint Period and within the Restricted Area, the Employee shall not, directly or indirectly, on the Employee’s own account or on behalf of any other person or entity:
(a) Engage in, own, manage, operate, control, be employed by, consult for, participate in, or be connected in any manner with any business or enterprise that involves [Restricted Activities];
(b) Assist any person or entity in engaging in any of the activities described in subclause (a) above within the Restricted Area; or
(c) Have any ownership interest in any business or enterprise that competes with the Employer within the Restricted Area, except for the passive holding of no more than five percent (5%) of the shares of a publicly listed company.
3. CONFIDENTIALITY
The Employee acknowledges that during employment, the Employee has had and will continue to have access to the Employer’s confidential and proprietary information, including but not limited to trade secrets, client lists, financial data, business strategies, marketing plans, product development information, pricing structures, and other materials not generally known to the public (collectively, “Confidential Information”). The Employee agrees not to use or disclose any Confidential Information at any time during or after the termination of employment, except as required in the performance of the Employee’s duties for the Employer or as required by law. This obligation is in addition to any obligations under a separate Employee Non-Disclosure Agreement between the Parties.
4. REASONABLENESS OF RESTRAINTS
4.1 The Employee acknowledges and agrees that the restraints contained in this Agreement, including the duration, geographic scope, and scope of restricted activities, are reasonable and go no further than is reasonably necessary to protect the Employer’s legitimate business interests, including its Confidential Information, goodwill, and client relationships.
4.2 The Employee further acknowledges that these restraints will not impose an undue hardship on the Employee and will not prevent the Employee from earning a livelihood in their chosen field, having regard to the specific and limited nature of the restricted activities and the geographic area.
4.3 The Parties acknowledge that the restraints in this Agreement have been freely negotiated at arm’s length and in compliance with the good faith obligations of the Employment Relations Act 2000.
5. SEVERABILITY
If any provision of this Agreement, or the application thereof to any person or circumstance, is held by a New Zealand court to be invalid, unreasonable, or unenforceable, the remaining provisions shall continue in full force and effect. The Parties acknowledge that, unlike New South Wales (Australia) which has the Restraints of Trade Act 1976, New Zealand does not have a dedicated statute allowing courts to read down unreasonable restraints. Accordingly, each restriction in this Agreement (as to duration, geographic area, and restricted activities) is intended to be read independently and severably, so that if one restriction is found unreasonable, the others may remain in force.
6. REMEDIES
The Employee acknowledges that a breach of this Agreement would cause irreparable harm to the Employer for which monetary damages alone may not be an adequate remedy. In the event of a breach or threatened breach of this Agreement, the Employer shall be entitled to seek urgent injunctive relief and other equitable remedies from the courts of New Zealand, in addition to any other remedies available at law or in equity. The Employee shall also be liable for all reasonable legal costs incurred by the Employer in enforcing this Agreement.
7. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of New Zealand, including the Contract and Commercial Law Act 2017 (CCLA) and the Employment Relations Act 2000. Any legal action or proceeding arising out of or relating to this Agreement may be brought in the Employment Court, the High Court of New Zealand, or any other court of competent jurisdiction in New Zealand sitting in [Governing Region], and each Party hereby submits to the jurisdiction of such courts.
8. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties with respect to its subject matter (restraint of trade and non-solicitation). It is supplementary to the Employee’s Individual Employment Agreement under the Employment Relations Act 2000. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by both Parties.
IN WITNESS WHEREOF, the Parties have executed this Non-Compete Agreement as of the Effective Date first written above.
EMPLOYER:
Name: [Employer Name]
NZBN: [Employer NZBN]
Authorised Representative:
Date: [Effective Date]
EMPLOYEE:
Name: [Employee Name]
Position: [Employee Title]
Date: [Effective Date]
Employer
________________
Signature
Employee
________________
Signature
What Is a Non-Compete Agreement (New Zealand)?
A Non-Compete Agreement in New Zealand restricts a party from competing, soliciting clients or staff, or bypassing the other party for a defined period and area, enforceable so far as reasonable under the Employment Relations Act 2000.
New Zealand does not have dedicated national legislation governing post-employment restraints of trade in the private sector, unlike New South Wales in Australia, which has the Restraints of Trade Act 1976 (NSW) (a statute that allows courts to 'read down' an unreasonable restraint and enforce it in modified form). In New Zealand, courts apply the common law reasonableness test, which means that an unreasonable restraint is simply void — courts cannot modify it to make it enforceable. This places a premium on careful drafting, confirming that each component of the restraint (duration, geographic scope, and restricted activities) is independently reasonable.
The Employment Relations Act 2000 is also relevant to non-compete agreements in New Zealand. The ERA's good faith framework (section 4) applies to the negotiation of restraint clauses. Employers must act in good faith when seeking to introduce restraints, particularly for existing employees. The ERA's personal grievance process is available if an employee believes they have been unjustifiably disadvantaged by the manner in which a restraint was imposed.
Recognised legitimate protectable interests in New Zealand include confidential information and trade secrets, established customer and client relationships, the goodwill of the employer's business, and the product of the employer's investment in specialised training. General professional skills and knowledge acquired during employment are not protectable interests and cannot be the subject of a valid restraint.
When Do You Need a Non-Compete Agreement (New Zealand)?
A Non-Compete Agreement is needed whenever an employer in New Zealand wishes to protect its legitimate business interests from competitive conduct by a departing employee. The agreement is most valuable — and most likely to be enforceable — where the employee has had genuine access to confidential information, trade secrets, or key client relationships that could cause real harm to the employer's business if misused.
The circumstances in which a non-compete agreement is most commonly used and most strongly justified include: senior employees, executives, and directors who have access to strategic business information, financial data, business plans, and market strategy; sales and business development staff who are the primary point of contact with key clients and who have built strong personal relationships with those clients on the employer's behalf; technical staff (software developers, scientists, engineers) who have been given access to proprietary technology, trade secrets, source code, or undisclosed inventions; employees in financial services, legal, or professional services who have access to client portfolios, confidential client information, and specialised methodologies; and employees who have received substantial investment in specialist training at the employer's expense and who could apply that training directly to benefit a competitor.
A non-compete agreement is less likely to be enforceable — and less necessary — for junior employees with general duties and no access to sensitive information or key client relationships. Attempting to impose wide restraints on junior staff carries the risk that the restraint will be found unreasonable and unenforceable, and may also create difficulties under the ERA's good faith framework if the restraint is seen as disproportionate.
Non-compete agreements are typically used alongside employee NDAs (to protect confidential information) and may also include non-solicitation clauses (to protect client and employee relationships specifically). The combination of these three types of obligation provides thorough protection for the employer's legitimate business interests.
What to Include in Your Non-Compete Agreement (New Zealand)
A legally enforceable Non-Compete Agreement for New Zealand under the common law reasonableness test must address the following key elements.
The legitimate protectable interests clause identifies the specific business interests that the restraint is designed to protect. New Zealand courts will only enforce a restraint that protects a genuine proprietary interest — confidential information, trade secrets, established client relationships, or goodwill. The agreement should clearly identify the specific interests at stake in the employer's particular business context, as this directly informs the court's assessment of whether the restraint is reasonable.
The consideration clause is essential. Adequate consideration must be provided in exchange for the employee's agreement to the restraint. For restraints agreed at commencement of employment, the offer of employment is sufficient consideration. For restraints imposed on existing employees, new consideration (such as a salary increase, promotion, or one-off payment) must be provided. Without adequate consideration, the restraint may be unenforceable.
The restraint period clause must specify a duration that is proportionate to the employer's legitimate interests and the employee's role. New Zealand courts are more likely to uphold restraints of 3 to 12 months for most employees, with longer periods reserved for senior executives or those with access to particularly sensitive information. Because New Zealand courts cannot read down an unreasonable duration, the period must be carefully calibrated.
The geographic scope clause must be specifically tailored to the employer's actual operating area. A nationwide restraint may be appropriate for a business that genuinely operates nationally and where the employee's role had national reach, but would be excessive for a local or regional employer. Specific geographic limits (such as a radius from the employer's office or a defined region) are more likely to be upheld.
The restricted activities clause must describe the specific activities that are restricted with sufficient precision. Overly broad restrictions that prevent the employee from working in any capacity in their industry are unlikely to be enforced. The clause should be focused on activities that directly compete with the employer's business and that the employee's role specifically equipped them to pursue. The severability clause is important in NZ because courts will not redraft the restraint — if individual restrictions are unreasonable, they must be capable of being severed and the remainder enforced. The forms-legal.com Non-Compete Agreement (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Non-Compete Agreement (New Zealand) (New Zealand) [Legal document template]. Forms Legal. https://forms-legal.com/new-zealand/employment/contracts/non-compete-agreement-new-zealand
"Non-Compete Agreement (New Zealand) (New Zealand)." Forms Legal, 2026, https://forms-legal.com/new-zealand/employment/contracts/non-compete-agreement-new-zealand.
@misc{formslegal-non-compete-agreement-new-zealand,
author = {{Forms Legal}},
title = {Non-Compete Agreement (New Zealand) (New Zealand)},
year = {2026},
howpublished = {\url{https://forms-legal.com/new-zealand/employment/contracts/non-compete-agreement-new-zealand}},
note = {Free legal document template. Based on Employment Relations Act 2000}
}Also available for these jurisdictions:
Frequently Asked Questions
Yes, but they are not automatically enforceable. Under New Zealand common law — as codified in the Contract and Commercial Law Act 2017 (CCLA) — a restraint of trade is prima facie void as contrary to public policy. It will only be enforced if two conditions are met: first, the employer must demonstrate a legitimate protectable business interest (such as trade secrets, confidential information, or established client relationships); and second, the restraint must go no further than is reasonably necessary to protect that interest. Courts assess reasonableness by reference to the duration of the restriction, the geographic scope, and the range of restricted activities. Unlike New South Wales in Australia, New Zealand does not have a dedicated statute (such as the Restraints of Trade Act 1976 (NSW)) that allows courts to 'read down' an unreasonable restraint and enforce it in a modified form. New Zealand courts may sever an unreasonable component of a restraint, but cannot rewrite it. This means it is important to draft restraints carefully, ensuring each component is independently reasonable.
New Zealand courts have recognised several categories of legitimate protectable interests that can justify a restraint of trade. These include: confidential information and trade secrets acquired during employment; established customer and client relationships, particularly where the employee was the primary point of contact and the relationship was built through the employer's resources and goodwill; the goodwill of the employer's business, including the employer's investment in training the employee and introducing them to clients; and specific know-how or proprietary methodologies that are unique to the employer's business. By contrast, general skills, knowledge, and experience that the employee has acquired during employment — and that are part of their general professional competence — are not protectable interests. An employer cannot prevent an employee from using their general professional skills in subsequent roles. The restraint must be directed at protecting the specific proprietary interest, not at preventing competition generally.
There is no statutory maximum duration for restraints of trade in New Zealand. Courts assess duration as part of the overall reasonableness test. In practice, restraints of 3 to 12 months are most commonly upheld for general employees with access to confidential information or client relationships. Periods of up to 18 months or 2 years have been accepted for senior executives with extensive access to highly sensitive strategic information, proprietary technology, or key client relationships. Longer periods are difficult to justify and risk being struck down entirely by New Zealand courts. Unlike Australia (NSW), New Zealand courts cannot read down an unreasonable duration and enforce a shorter period — they must either enforce the clause as drafted or decline to enforce it at all. This makes careful drafting of the duration even more important in New Zealand than in New South Wales.
Consideration is essential for the enforceability of any contract, including a non-compete agreement, under New Zealand contract law and the Contract and Commercial Law Act 2017 (CCLA). If the non-compete clause is included in the employment agreement at the time the employee is first engaged, the offer of employment itself constitutes adequate consideration. However, if a non-compete clause is added to the employment agreement of an existing employee, new and fresh consideration must be provided in exchange for the employee's agreement to be bound. Adequate fresh consideration for existing employees may include a promotion, a salary increase, a one-off payment, access to new categories of confidential information, or the provision of specialised training. Courts will scrutinise whether genuine consideration was provided when a restraint is imposed during employment, and a clause without fresh consideration may be unenforceable. The good faith obligations of the Employment Relations Act 2000 also require the employer to act in good faith when seeking to introduce new obligations on an existing employee.
A non-compete clause (or restraint of trade clause) restricts the employee from working for a competitor or setting up a competing business within a defined geographic area and period. It is a broader restriction on how the employee can earn a living after departure. A non-solicitation clause is narrower — it prevents the employee from approaching the employer's existing clients, customers, or staff, but does not prevent the employee from working in the same industry or for a competitor more generally. New Zealand courts tend to scrutinise non-compete clauses more closely than non-solicitation clauses, because non-compete clauses have a greater effect on the employee's ability to work in their chosen field. Non-solicitation clauses are generally considered easier to enforce because they are more targeted at protecting the specific proprietary interest (the client relationship or the workforce) rather than restricting competition generally. Both types of clause should be included where the employer has both types of protectable interest, and both must be reasonable in scope and duration.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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