The Employment Court has recently confirmed that a garden leave provision will be taken into account when considering the reasonableness of the duration of any post-employment restraint.

In Air New Zealand v Kerr, the Court considered the reasonableness of a six month non-compete restraint on top of a six month period of garden leave. After resigning from his role as General Manager of Air Nelson and accepting a role with Jetstar, Mr Kerr was placed on garden leave for six months, as provided for in his employment agreement. While his employment agreement contained a six month non-compete restraint, Mr Kerr told Air New Zealand he intended to start employment with Jetstar immediately after his period of garden leave, as he did not consider the restraint to be reasonable or enforceable.

The Employment Court agreed. It held that the six month period Mr Kerr had already spent on garden leave was sufficient to provide Air New Zealand with all the protection it needed in respect of its proprietary confidential commercial information. While the Court held Air New Zealand had a legitimate proprietary interest in the information it was seeking to protect, it also held Air New Zealand had "exaggerated the need for protection". The Court was influenced, in part, by Mr Kerr's evidence that Air Nelson (as opposed to Air New Zealand) did not compete directly with Jetstar.

The Court's judgment is a good reminder to tailor any restraints to what is reasonably necessary (in terms of scope, length and geography) to protect your proprietary interests.

You can read the judgment here: