Are your post-employment clauses fit for purpose?

Across New Zealand, post-employment obligations have become a growing point of concern for both employers and employees. As organisations compete for talent in a tighter market and the mobility of information increases, many businesses are looking more closely at how they protect their commercial interests when employees move on. Clauses designed to manage the risks around client relationships, confidential information and the broader value of a brand are becoming more visible in employment agreements, yet their purpose and impact are not always well understood.

At the same time, job seekers are navigating contracts that look very different from those of even a few years ago. Many sign agreements without real clarity on what post-employment promises actually require of them or how such obligations could influence their next career step. This lack of understanding on both sides has created a widening grey area in a landscape already shaped by rapid digital change and rising expectations around workplace transparency.

In this context, conversations about what post-employment obligations do, why they exist and how enforceable they are have never been more important. With businesses working to strike a balance between protection and fairness, and employees seeking both opportunity and clarity, the ability to interpret these clauses practically is quickly becoming essential.

“These clauses are just promises you’re asking an employee to keep, and they’re keeping these promises post-employment.”

On a recent NZ Market Update, Frog Recruitment Managing Director, Shannon Barlow, was joined by Sanam Salmani, Employment Lawyer and host of Law Lenz, to unpack the rising focus on post-employment obligations and the confusion surrounding their purpose and enforceability.

Many people approach post-employment obligations as technical clauses, but the core idea is much simpler. As Sanam described, these clauses operate as “promises that… continue and live on after employment ends”, creating an ongoing expectation that former employees will not compromise the legitimate interests of their previous employer. This includes safeguarding confidential information, strategic insights and the goodwill that contributes to a company’s market value. By reframing the concept in everyday terms, it becomes easier to understand why these clauses matter and where they fit into modern business risk management.

Their growing prevalence reflects a shift in how easily information can move. The rise of cloud systems and remote access means data is more portable than ever, and as Sanam noted, “it doesn’t take much to put a USB stick in or to open your drive and move things across”, highlighting the practical risks employers now face. This digital fluidity has prompted many organisations to insert increasingly broad restraints, sometimes without fully understanding how likely they are to hold up. While the intent is protection, the execution can leave businesses with clauses that are too general to enforce and employees unsure of their true obligations.

A key part of the discussion involved breaking down the differences between restraint of trade, non-solicitation and non-dealing clauses. Restraints of trade act as an overarching category, usually encompassing non-compete provisions designed to stop someone from working “five kilometres down the road” for a competitor within a set period. Non-solicitation clauses, which are generally far more enforceable in New Zealand, centre on preventing the poaching of clients or employees. Non-dealing clauses go further by addressing situations where a customer initiates contact, ensuring that former employees cannot simply accept business that naturally follows them. This distinction matters, because each clause protects a different risk profile and comes with different expectations.

Enforceability remains one of the most misunderstood aspects of these clauses. A common perception, fuelled by online forums, is that restraints are either meaningless or universally binding. Sanam’s review of discussions on platforms like Reddit showed people frequently dismissing them outright as “throwaway clauses”, yet New Zealand courts do enforce them when employers can demonstrate a specific and legitimate business interest. The emphasis is on actual, not feared, risk. For example, an employer must show that the individual had access to sensitive information or played a pivotal role in strategic decision-making. Without that factual grounding, even the most tightly worded clause may not stand up.

Employees, meanwhile, often underestimate the significance of what they sign. Many do not stop to consider how much access they will have to commercially sensitive material or how their future career moves might intersect with contractual obligations. Sanam reflected on her own experience of receiving a restraint that attempted to bar her from working “anywhere” in New Zealand for twelve months, illustrating how disproportionate some clauses can be. She contrasted this with cases where senior business development managers, who “built those relationships across New Zealand”, might genuinely pose a risk to goodwill and client continuity if they walked into a competitor. The key is context: the role someone held, the information they accessed and the role they intend to move into all shape whether a restraint is reasonable.

This leads naturally to the need for tailored drafting. While non-solicitation clauses are broadly applicable, more complex restraints require thoughtful construction. Sanam explained that once an organisation receives proper advice, they may “copy and paste a very similar clause across” roles of similar seniority. The issue arises when companies apply one blanket clause to every employee, no matter how removed they are from client relationships or sensitive strategic information. Tailoring is less about reinventing the wheel and more about aligning each restraint with the commercial realities of the role.

What should employers refine in their post-employment obligations?

• Clarify which risks actually require protection rather than relying on assumed threats
• Assess which employees genuinely access sensitive or strategic information
• Ensure restraint periods and geographic limits are proportionate and justified
• Distinguish between senior and non-senior roles when drafting agreements
• Maintain documented evidence of the interests being protected
• Obtain tailored legal advice, particularly when considering non-compete clauses