{"id":230319,"date":"2026-05-12T18:38:14","date_gmt":"2026-05-12T05:38:14","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=230319"},"modified":"2026-05-12T18:44:53","modified_gmt":"2026-05-12T05:44:53","slug":"employers-restrictive-convenant-breach","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/","title":{"rendered":"What Should Employers Do Immediately After a Restrictive Covenant Breach?"},"content":{"rendered":"\n<p>When a former employee breaches a restrictive covenant, whether it is a non-compete, non-solicitation, or <a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/how-to-enforce-confidentiality-agreement-nz\/\">confidentiality clause<\/a>, swift action is essential. These covenants protect your business interests, client relationships, and confidential information.&nbsp; This article outlines the immediate actions employers should take when discovering a breach, from verifying the violation and preserving evidence to seeking legal remedies that protect your business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Restrictive Covenant?<\/h2>\n\n\n\n<p>A restrictive covenant is a clause in an <a href=\"https:\/\/legalvision.co.nz\/employment\/employment-agreement\/\">employment agreement<\/a> that limits what an employee can do after their employment ends. Employers use these clauses to protect legitimate business interests, such as confidential information, client relationships, and workforce stability. Restrictive covenants aim to prevent former employees from using insider knowledge, business connections, or sensitive information in a way that harms the business.<\/p>\n\n\n\n<p>Common types of restrictive covenants include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Non-compete clauses: These prevent a former employee from working for a competitor or starting a competing business for a certain period and within a defined geographic area.<\/li>\n\n\n\n<li>Non-solicitation clauses: These stop a former employee from approaching or attempting to attract the employer\u2019s clients, customers, or employees. In some cases, they may also prevent the former employee from accepting work from former clients.<\/li>\n\n\n\n<li>Non-dealing clauses: These go further than non-solicitation clauses by preventing the former employee from having any business dealings with certain clients, even if the client makes the first approach.<\/li>\n\n\n\n<li>Confidentiality clauses: These prevent a former employee from disclosing, using, or sharing confidential information, trade secrets, or other sensitive business information.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Enforceability in New Zealand<\/h2>\n\n\n\n<p>To enforce a restraint of trade clause, such as a non-compete or non-solicitation clause, an employer must show that the restraint is reasonable and necessary to protect a legitimate business interest. Courts will not enforce a restraint simply because an employer wants to prevent competition.<\/p>\n\n\n\n<p>To improve the chances of enforcement, the restraint should:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>go no further than necessary to protect the business;<\/li>\n\n\n\n<li>apply for a reasonable period of time;<\/li>\n\n\n\n<li>cover only an appropriate geographic area; and<\/li>\n\n\n\n<li>protect genuine business interests, such as confidential information, client relationships, or workforce stability.<\/li>\n<\/ul>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span 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Verify the Breach and Preserve Evidence&nbsp;<\/h3>\n\n\n\n<p>Before taking action, confirm that a breach has actually occurred. Review the employee&#8217;s employment agreement to identify the specific restrictive covenants in place and their scope:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Check the exact wording. Does it cover the employee&#8217;s current activities?<\/li>\n\n\n\n<li>Is it a non-compete, a non-solicitation, or both?&nbsp;<\/li>\n\n\n\n<li>Are there confidentiality and intellectual property protections?<\/li>\n\n\n\n<li>Are you still within the restriction period?&nbsp;<\/li>\n\n\n\n<li>What is the restricted area?<\/li>\n<\/ul>\n\n\n\n<p>After reviewing the employment agreement, the employer should gather clear evidence of the suspected breach. This may include LinkedIn updates showing new employment, complaints from clients who were contacted by the former employee, evidence that confidential information is being used, or reports from current staff about attempts to solicit clients or employees.<\/p>\n\n\n\n<p>Employers should secure and preserve all relevant evidence before it is deleted, changed, or lost. This may include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the employment agreement and any relevant policies;<\/li>\n\n\n\n<li>email correspondence with the former employee;<\/li>\n\n\n\n<li>client lists and contact records;<\/li>\n\n\n\n<li>evidence of client contact, solicitation, or lost business;<\/li>\n\n\n\n<li>social media posts and professional networking profiles;<\/li>\n\n\n\n<li>financial records showing the commercial impact of the breach;<\/li>\n\n\n\n<li>witness statements from clients or current employees; and<\/li>\n\n\n\n<li>evidence that the former employee accessed confidential information, client databases, or sensitive business records before leaving the business.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">2. Act Quickly<\/h3>\n\n\n\n<p>Time is critical when enforcing restrictive covenants. The longer a breach continues, the more damage occurs to your business and the harder it becomes to remedy. Document the date you discovered the breach and move swiftly through the enforcement steps.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Seek Legal Advice Immediately<\/h3>\n\n\n\n<p>Contact your lawyer as soon as you identify a potential breach. Your lawyer will assess whether your restrictive covenant is enforceable and advise on the strength of your evidence and the most appropriate course of action based on the severity of the breach and potential damages.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Assess Damages<\/h3>\n\n\n\n<p>Calculate the financial impact of the breach. Have you lost clients? Has confidential information been misused? Are other employees being solicited? This assessment helps determine whether to pursue damages in addition to injunctive relief and informs your overall strategy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. Send a Cease and Desist Letter<\/h3>\n\n\n\n<p>Before commencing <a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/how-to-appear-in-court\/\">court proceedings<\/a>, consider whether sending a formal cease and desist letter to the former employee would be an effective first step. This letter should:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Identify the specific breached restrictive covenant<\/li>\n\n\n\n<li>Detail the evidence of the breach<\/li>\n\n\n\n<li>Demand immediate cessation of the prohibited activities<\/li>\n\n\n\n<li>Set a deadline for compliance&nbsp;<\/li>\n\n\n\n<li>Outline the consequences of continued breach, including legal action<\/li>\n<\/ul>\n\n\n\n<p>Many breaches are resolved at this stage, saving time and legal costs. The letter also demonstrates to the court that you attempted to resolve the matter before litigation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">6. Consider Interim Injunctions<\/h3>\n\n\n\n<p>If the breach continues after your cease and desist letter, or if the breach is causing immediate serious harm, consider whether applying for an interim injunction is required. This court order requires the former employee to stop the prohibited activities whilst the full case proceeds.&nbsp;<\/p>\n\n\n\n<p>Interim injunctions can be obtained quickly, making them a powerful tool for stopping ongoing breaches. However, they can be costly exercises and you should seek legal advice on whether it is an appropriate course of action.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Future Mitigation: Review Your Restrictive Covenants<\/h2>\n\n\n\n<p>Use this experience to review restrictive covenants across your business. Are they clearly drafted? Are the restrictions reasonable? Strengthening your covenants now can prevent future breaches and assist in enforceability.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2025\/04\/24124107\/LegalVision-NZ-Guide-To-NZ-Employment-Disputes.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Guide to NZ Employment Disputes<\/div>\n            <div class=\"body-text\">\n                <p>Dealing with workplace issues? Download this free guide for practical tips on resolving employment disputes and managing personal grievances.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/Guide-to-NZ-Employment-Disputes.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p dir=\"auto\"><strong>Key Statistics<\/strong><\/p>\n<ol dir=\"auto\">\n<li><strong>142<\/strong>: Restraint of trade disputes referred to mediation or the Employment Relations Authority in the 2024\u201325 year.<\/li>\n<li><strong>58%<\/strong>: Success rate for employers enforcing non-compete or non-solicitation clauses in recent ERA determinations.<\/li>\n<li><strong>67%<\/strong>: Proportion of New Zealand employment contracts that contain some form of restrictive covenant.<\/li>\n<\/ol>\n<p dir=\"auto\"><strong>Sources<\/strong><\/p>\n<ol dir=\"auto\">\n<li>Employment Relations Authority (2025)<\/li>\n<li>Employment New Zealand (2023)<\/li>\n<li>Employment Hero (2026)<\/li>\n<\/ol>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>When an employer discovers a possible breach of a restrictive covenant, they should act quickly and strategically. Restrictive covenants are not automatically enforceable, so the employer must take active steps to enforce them through the proper legal process. Acting early can improve the chances of protecting confidential information, client relationships, and other legitimate business interests.<\/p>\n\n\n\n<p>Key steps include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>acting quickly after discovering the breach, as delays can weaken the employer\u2019s position and limit the remedies available;<\/li>\n\n\n\n<li>reviewing the employment agreement to confirm the restrictive covenant applies and that the employee\u2019s conduct falls within its scope;<\/li>\n\n\n\n<li>gathering and preserving evidence, including emails, social media activity, witness statements, and records of client contact;<\/li>\n\n\n\n<li>assessing the commercial and financial impact of the breach to help determine the appropriate response;<\/li>\n\n\n\n<li>considering the available legal options, such as a cease and desist letter, an interim injunction, or court proceedings; and<\/li>\n\n\n\n<li>reviewing existing restrictive covenants across the business to ensure they remain reasonable, enforceable, and fit for purpose.<\/li>\n<\/ul>\n\n\n\n<p>LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced <a href=\"https:\/\/legalvision.co.nz\/dispute-lawyers-lp\">disputes lawyers<\/a> help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision\u2019s legal membership, call <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or&nbsp;<a href=\"https:\/\/legalvision.co.nz\/membership\/\" target=\"_blank\" rel=\"noreferrer noopener\">visit our membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1778564168995\"><h3 class=\"schema-faq-question\">What makes a restrictive covenant enforceable in New Zealand?<\/h3> <p class=\"schema-faq-answer\">A restrictive covenant is enforceable only if it&#8217;s reasonable in scope, duration, and geographic area, and necessary to protect legitimate business interests such as confidential information, client relationships, or trade secrets.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778564175785\"><h3 class=\"schema-faq-question\">What&#8217;s the difference between a cease and desist letter and an injunction?<\/h3> <p class=\"schema-faq-answer\">A cease and desist letter is a formal written demand to stop the breach, whilst an injunction is a court order legally prohibiting the employee from certain actions.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778564197960\"><h3 class=\"schema-faq-question\">What evidence should employers gather when a restrictive covenant is breached?<\/h3> <p class=\"schema-faq-answer\">Preserve the employment agreement, email correspondence, client lists, social media activity, witness statements, financial records showing commercial impact, and evidence the former employee accessed confidential information before leaving.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778564203922\"><h3 class=\"schema-faq-question\">Why is acting quickly important when a restrictive covenant is breached?<\/h3> <p class=\"schema-faq-answer\">The longer a breach continues, the greater the damage to your business and the harder it becomes to remedy. Delays can also weaken your legal position and limit the remedies available to you.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>When a former employee breaches a restrictive covenant, whether it is a non-compete, non-solicitation, or confidentiality clause, swift action is essential. These covenants protect your business interests, client relationships, and confidential information.&nbsp; This article outlines the immediate actions employers should take when discovering a breach, from verifying the violation and preserving evidence to seeking legal<a href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/\">Continue reading <span class=\"sr-only\">&#8220;What Should Employers Do Immediately After a Restrictive Covenant Breach?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13518,"featured_media":228294,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[5,9],"tags":[25,54,504,719,2345],"class_list":["post-230319","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","category-disputes-and-litigation","tag-small-business","tag-medium-business","tag-injunction","tag-cease-and-desist","tag-restrictive-covenant-breach"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What Should Employers Do Immediately After a Restrictive Covenant Breach? - LegalVision New Zealand<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Should Employers Do Immediately After a Restrictive Covenant Breach? - LegalVision New Zealand\" \/>\n<meta property=\"og:description\" content=\"When a former employee breaches a restrictive covenant, whether it is a non-compete, non-solicitation, or confidentiality clause, swift action is essential. These covenants protect your business interests, client relationships, and confidential information.&nbsp; This article outlines the immediate actions employers should take when discovering a breach, from verifying the violation and preserving evidence to seeking legalContinue reading &quot;What Should Employers Do Immediately After a Restrictive Covenant Breach?&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/\" \/>\n<meta property=\"og:site_name\" content=\"LegalVision New Zealand\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalVision\" \/>\n<meta property=\"article:published_time\" content=\"2026-05-12T05:38:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-05-12T05:44:53+00:00\" \/>\n<meta property=\"og:image\" 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Casey-wyness"},"url":"https:\/\/legalvision.co.nz\/author\/nataliecaseywyness\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/#faq-question-1778564168995","name":"What makes a restrictive covenant enforceable in New Zealand?","acceptedAnswer":{"@type":"Answer","text":"A restrictive covenant is enforceable only if it's reasonable in scope, duration, and geographic area, and necessary to protect legitimate business interests such as confidential information, client relationships, or trade secrets.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/#faq-question-1778564175785","name":"What's the difference between a cease and desist letter and an injunction?","acceptedAnswer":{"@type":"Answer","text":"A cease and desist letter is a formal written demand to stop the breach, whilst an injunction is a court order legally prohibiting the employee from certain actions.\u00a0","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/#faq-question-1778564197960","name":"What evidence should employers gather when a restrictive covenant is breached?","acceptedAnswer":{"@type":"Answer","text":"Preserve the employment agreement, email correspondence, client lists, social media activity, witness statements, financial records showing commercial impact, and evidence the former employee accessed confidential information before leaving.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/disputes-and-litigation\/employers-restrictive-convenant-breach\/#faq-question-1778564203922","name":"Why is acting quickly important when a restrictive covenant is breached?","acceptedAnswer":{"@type":"Answer","text":"The longer a breach continues, the greater the damage to your business and the harder it becomes to remedy. Delays can also weaken your legal position and limit the remedies available to you.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/230319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13518"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=230319"}],"version-history":[{"count":2,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/230319\/revisions"}],"predecessor-version":[{"id":230322,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/230319\/revisions\/230322"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/228294"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=230319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=230319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=230319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}