Employer wins penalties against ex-employee but not against the competing company

An employer sought penalties and compensation from a former employee and from a company set up by her spouse to compete with it. The Authority found she had agreed to her second employment agreement: she initialled every page, signed the last and took up the more senior role it carried. It found three breaches: no permission was sought before she became a shareholder in the competing company; she solicited people who referred work to the employer while employed; and she breached the implied duty of fidelity, the duty to act in the employer's best interests, by working a competitor's job on a day of paid leave.

Applying the s 133A factors, the Authority imposed no penalty for the shareholding breach because she promptly sought removal as shareholder and the competing business stopped trading for three months. Penalties of $4,000 and $1,000 were set for the other two breaches, payable under s 134. The remaining claims failed, including a s 134(2) penalty against the company. Costs were reserved.

How did the Authority weigh steps taken after resignation as mitigation against the deterrence it described for the solicitation breach?

What did the Authority treat as the employer's proprietary interest in relationships with people who referred work, and why did it call that point finely balanced?

[2026] NZERA 724