Employment Relations (Restraint of Trade) Amendment Bill

I move, That the Employment Relations (Restraint of Trade) Amendment Bill be now read a first time. I nominate the Education and Workforce Committee to consider the bill.

This bill is one of the reasons I came to Parliament; it’s my “why”. We talk about that quite flippantly sometimes, but this is a bill that came about because of my experience over 25 years of employment law. It was a fairly frustrating experience because what I saw was a parade of low-paid employees coming into my office who couldn’t move jobs. They couldn’t ask for a pay rise, because they wouldn’t get one, because they couldn’t move jobs, and they couldn’t move to better work.

It’s really important for low-paid workers to be able to do that. Most people get a pay rise by moving up in their career, and that’s an important freedom that we should have. I’ve seen kindergarten workers, I’ve seen all sorts of low-paid workers—milk workers—who are restrained. Those are not the kinds of people that most people in this country think would be restrained from going to another company in competition with the one that they’re working in. We need, in this country, to get higher wages. We need, in this country, to build productivity. Restraints of trade, called “non-competition clauses” in America, are getting in the way of doing that and there’s good evidence to prove that.

I want to talk about the nature and structure of the bill that I brought to the House. I brought to the House a bill which bans restraints for low and middle income earners, and I did that because they are the workers who need to move the most. They are also the workers who are not earning enough to be able to go to court and challenge the restraints that are in their employment agreements. Usually, the people who came into my office—the kindergarten teacher or the seamstress—hadn’t actually read what was in their contract and they signed it.

Often, the restraints that I saw were probably not enforceable at law, yet most of those people walked away. They didn’t actually take their employer on with regard to the restraint, and that’s because they simply couldn’t afford to. It costs a lot of money and it takes a lot of confidence to go to court. That’s why, when you ban these restraints, you see wages go up, and they go up for our most vulnerable.

I can tell you that because there’s work in America that proves it. In America, some of the states actually ban these restraints. When they do so, they see an uptick in wages of 6 percent over five years. Now, that’s quite a lot of money to most people and they move from job to job—and guess what! It actually helps small and medium sized businesses because they have a stream of workers that they can’t otherwise access.

Now, this practice of restraints didn’t used to be such a big deal; it didn’t happen as much. But, actually, it’s a growing practice and we didn’t know it was happening in this country because we don’t keep individual agreements and it tends to happen there. They’ve done a study in Australia and it shows that one in five workers there are restrained—one in five. It is just not possible that those restraints are really to do much more than what I am saying they are to do. They are there to stop workers moving into other work and stop them moving to the competition, and those things are very much linked. This suppresses wages and it suppresses innovation.

It’s really important that you can go, as a worker, and set up on your own account when you’ve grown those skills. That’s a good thing for our country; that will make us thrive as a nation and it will feed our small businesses. In California, they actually banned all sorts of restraints—so a very much wider group of restraints—and a lot of people say that’s why they have Silicon Valley. They have it because the IT companies actually do not restrain their workers and it helps move people. And there is innovation as a consequence—it actually encourages that kind of knowledge nurture, and that is what the evidence says.

It’s got so serious in the United States that the Federal Trade Commission will be bringing in a rule banning them. If we don’t ban them and they do, they will be ahead of the curve in terms of what they’re doing for workers and we will not. So this is a rule that has application across the entire States and that will be happening, and it is on the table right now, because other countries have recognised that this is actually keeping people poor.

Now, I want to talk to you about the other part of this bill, because there’s a ban on low-income workers and medium-income earners getting those restraints. It’s a simple thing which means that they know and employers know exactly what the story is. But I haven’t chosen to do that for workers on three times the minimum wage, so that’s workers on about $120,000. They can be restrained, but there are some rules around that.

The first is that everyone thinks about it in terms of what it costs. It costs not only the employer but it also costs the employee. So there must be reasonable consideration for that. Now, consideration’s a legal word, but it just means “price”, “value”. You have to attribute value to that, and that will actually sharpen the mind as to whether you need it. There will be a limit on that restraint. It’s actually six months—it’s a decent amount of time—and then you can go across.

Now, before I finish, I want to talk about one restraint which really shocked me. Because I have had a lot of individual employees in my office, and they had come in and they had often said to me—often the women—that they would not be actually challenging their restraint because they couldn’t afford to, that really worried me. Those were the seamstresses and the kindergarten teachers.

In fact, the research suggests that in those cases where they have banned these restraints—and one of them is Oregon, in a very similar form to this law—women’s wages went up double the amount of men’s. That is an interesting indication. If we’re serious about pay equity, that’s where we have to go. We have to fix the mechanisms. There is speculation about why that is. That’s the stats. My speculation is that a lot of women lack the confidence and they’re the second income earner, etc. They are not the people who take cases to court. So that’s the situation.

But the case I want to actually focus your minds on is not that; it was in a collective agreement and I was absolutely shocked to see it. It was the Starbucks agreement. Now, the Starbucks agreement bans its baristas—its workers on $20.50 an hour—from working other places for six months if they work in competition. Can you imagine what that is? I presume that’s a McDonald’s. I presume it’s a little cafe. They are not allowed to move, and it went into a collective agreement. That is absolutely shocking to me because I never thought I’d see it in that context.

I’ve seen it in the Amazon agreements for the workers in America. I’ve seen those contracts in America. But I did not know that it had come here, that practice. This law, as it is currently being interpreted in New Zealand, does affect baristas. We have had a case on that. It’s called Fuel Cafe and it affects the baristas.

This law is coming to our shores—that kind of practice is coming to our shores—thick and fast. You know who it benefits? It does not benefit medium and small businesses. It does not benefit New Zealanders. It benefits multinationals who cynically stop their workers going to the competition, stop them asking for a pay rise because they can’t go anywhere else. For me, that is shocking. I commend this bill to the House.

Thank you, Madam Speaker. The National Party does not support the Employment Relations (Restraint of Trade) Amendment Bill of Helen White. It’s interesting that we’ve just heard a speech from the member talking about the United States and the experiences of the United States. One of the things that she might have looked at—one of the geniuses of the United States—is that there are all these different states, more than 50, all with different approaches. What people see is that there has been a massive drift of population and investment away from high-tax states to lower-tax states and lower-regulation states, particularly in the south of America. And that’s great. People can decide what kind of business environment they want to live in and what sort of tax environment they live in, and so they move. This is exactly the sort of legislation that would be encouraging a lot of people to move around, because, if there is an issue there—[Interruption]

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Sorry, I’m just going—with apologies to the member—but, man, the noise is getting up a wee bit. Now, I know this is going to be a vibrant debate; I understand that. But can we keep the interjections rare and reasonable, and can I just ask members of the House that, when they are full of excitement and passion, if they wish to interject, can they do so from their seat.

Thank you. So there is a kernel of an issue here that the member raises around excessive restraints of trade for very modestly paid workers. But that’s not what the bill is talking about. The bill includes everybody earning up to three times the minimum wage, which in New Zealand is $141,648, which happens to be about 95 percent of income earners in New Zealand. The bill will apply to virtually all New Zealand workers and so, effectively, ban restraint of trade agreements for virtually all New Zealand workers. And there is a reason why we have restraint of trade. It’s not unreasonable for a business which has developed its own secrets and skills, and trains up somebody in those skills, and trains up somebody to have all the connections in a particular industry—it’s perfectly reasonable for citizens to contract between those things, and this bill bans that for everybody earning up to three times the minimum wage, which is over $140,000 in New Zealand and most New Zealand workers. We think that is extremely excessive. Then it requires half-payments if you do manage to be over that—half of weekly earnings for the six months, if there was a restraint of trade, which would be a very serious impost as well.

The only point we’d make is that we’ve got two challenges in this country. One is that we’re, on the economic front, facing extreme war for talent with Australia. We’ve just had the Prime Minister from Australia over here, and he’s got their hands out, saying, “Come over here, all your skilled workers. Come here and we’ll take you all.” And we’re also struggling from a lack of growth. Now, if the solution to that is higher taxes for those who move, that’s going to be difficult. It’s not going to help growth. But if you continue to add costs and inflexibility into New Zealand businesses, such as this and such as the fair-pay agreements and all the other additional rigidities that this Government is imposing on our workforces and the relationships between employees and employers, that just makes it difficult for people to invest, it makes it difficult for people to grow, and it makes people think twice before they take on workers, give all the trade secrets and understandings of your business to them in order to train them up with the sure fire knowledge that they can just walk off to the competitor the next day and take all those learnings with them.

Yes, there is an issue that Helen White has identified, but this bill that’s before us in the House is a sledgehammer to break a nut, and it is just another example of legislation being pushed through to make our workplace environments less agile and less flexible. It’s coming at a time when businesses are struggling with cost of living pressures, with labour market shortages, a barrage of thefts and ram raids and all sorts of other troubles that they have to deal with, one thing after another confronting New Zealand businesses, and then lo and behold, along comes Helen White from wherever she comes from, in Auckland somewhere, with a brilliant idea to make their life even more difficult and even more difficult to maintain the things that they have developed in their business in a reasonable way.

My only suggestion to the member would be to go back to the drawing board and think about this more carefully, and when she has, we’d be very happy to consider a better bill. But, as far as this bill is concerned, I’m afraid we will not be supporting it. Thank you very much.

Thank you, Madam Speaker, it’s a pleasure to take a call on the Employment Relations (Restraint of Trade) Amendment Bill brought by my colleague Helen White. I remember Helen, prior to being elected into Parliament, talking about how one of the things she wanted to change was the unfair situations of restraint of trade, and then I was there on the day that it was drawn from the biscuit tin, and so I congratulate her on having this very good bill drawn and, hopefully, being able to become part of the law of New Zealand before this term of Parliament is up, or possibly next term, depending on how we get through the readings in the next sitting block.

I just wanted to focus a wee bit on some of the comments made by the members opposite about the situation of restraints of trade, and I think Helen gave a really good overview of how this bill works, so I won’t go over that ground again. Restraints of trade are currently prima facie illegal for all workers in New Zealand. That is the current, stated law. So to hear members opposite say, “Well, this will affect too many people.” is a little bit unusual considering that, at the moment, unless these restraints are proved to be reasonable, they are actually illegal for all workers. So I think the—

💬 Toni Severin: What happens when you have an employment lawyer write your contract?

When you have an employment lawyer write your contract, usually the employment lawyer will write a contract to benefit the employer and so it’s important that people get the advice that they need when signing contracts. But the member does raise a good point which is that most of the time in New Zealand—and I’ve worked in other jurisdictions as well but in my experience working here—people don’t scrutinise their employment contracts to the nth degree around restraints of trade. It’s usually something that comes up when they’re leaving a job. And that’s problematic because it’s only when they come to leave a job that they realise that, actually, they are restrained and these are sometimes enforceable restraints that can actually stop them from moving on to other work and becoming part of the productive economy, which I assume is what we would all want people to be—to be able to make a living—especially in the cost of living situation that we have at the moment.

But people don’t always read them and they don’t always know that there’s a restraint of trade clause in there and it does stop them from moving on, which is regretful. So I think it is an important restriction on the use of these, and I think it will make it clearer for people, the context in which restraints are appropriately used, and Helen did go through all of those areas and I don’t have as much time to go over all of them. Just in short, the restraints do not apply to the highest earners and there may be some argument for the very highest earners working in very competitive industries to have some kind of restraint, if reasonable, in some circumstances. So for those who are above the income threshold, they will be able to be restrained in some instances. It does apply a payment for that period of time which you can’t work, and I think most reasonable people would say that if you are not able to work, you should receive some compensation for it. It’s not their full wage; it’s only half of that wage. So that is another positive thing about this bill—the requirement for people to be paid for those small cases where there is a reasonable restraint.

So those are all really important steps that I think will help address some inequity that we currently have in the situation in New Zealand where we do have something which is meant to be illegal for everyone, but we know that sometimes, when it’s in your employment contract, you don’t have the benefit of an employment lawyer to be able to say to you, “Well, that’s not reasonable.”, then you may not be able to apply for the job that you want. You may, as my colleague has said, be in a situation where you can’t earn the types of income that you would otherwise be able to earn. It might unfairly prevent you from earning an income. It might unfairly prevent your career from progressing.

This bill goes a really long way to making sure that the situation for workers, when they do have a restraint of trade, is fairer, and I think it will not only improve the situation for working people but improve the clarity and the accessibility of the law for most people which, to this date, has been only outlined in case law, which is not very accessible to the majority of the population.

So I commend, again, the member Helen White for bringing this bill. Well done, Helen, and I think it will make a real difference to New Zealand workers. I commend it to the House.

Madam Speaker, thank you. I rise to speak to the Employment Relations (Restraint of Trade) Amendment Bill. ACT will not be supporting this bill, which probably doesn’t surprise too many over the other side. The bill has four main parts. It provides that restraints of trade have no effect wherever an employee earns less than three times the minimum wage—that was mentioned earlier; it limits the use of restraints of trade to those situations where the employer has a proprietary interest to protect through the use of these provisions; it requires employers to pay employees who are subject to a restraint of trade provision an amount equal to half of the employee’s weekly earnings for each week that the restraint of trade remains in effect; and it limits the duration of restraints of trade to no more than six months. That’s basically what the bill says.

But restraints of trade, just like was mentioned earlier in the last bill, are there for a reason. Restraints of trade are there for a reason. Starting up and owning a business is really hard work. Building good will and clients is really important. They invest money—business owners invest money. They take the risks, often not paying themselves but making sure that their staff get what’s owed to them. Loyalty and the safeguarding of those things that make a successful business are not really unreasonable expectations. The bill doesn’t address scenarios where lower-paid employees have access to confidential information and an employer will be unable to protect their interests.

What happens now when a business needs a worker and a worker needs a job is they have a meeting, they work out what’s fair, agree to the terms of employment, and sign a contract. Then they shake hands and they start work. Once they start, the employee gets paid. They get holidays, they get rest breaks, they get sick leave, they get KiwiSaver, and they get numerous other rewards. The employee just needs to do what they voluntarily agreed to do. It’s a fair, mature system and it works. We let the two parties negotiate in good faith. We certainly don’t need any more legislation. This Government’s mistrust of business owners is really sad, and it’s through the bills over the last couple of years. It’s just really sad and the disrespect for employees is really patronising.

The feedback already that I’ve received from legal employment experts—and, dare I say it, even more expert than what we’ve got sitting opposite us—is that the bill is not necessary. Some of the comments I’ve received are: “The law change is a blunt instrument and unduly restrictive.” Here’s another one: “The law has the intent of protecting lower-income workers who are subjected to unfair restraint of trading laws. However, the sort of examples the law was aimed at protecting against were probably unenforceable in law anyway.” And the last one from an employment expert: “It isn’t clear what mischief the bill is attempting to address and resolve that is not able to be adequately dealt with by the courts. We consider that if passed as introduced, the bill would create more issues than it is attempting to resolve.” They’re experts.

This bill is a waste of time. It’s not needed and shows a real lack of knowledge yet again as to what makes businesses tick. It’ll pass this first reading, submitters will overwhelmingly oppose it, and the Government will ignore them. That’s just par for the course with this Government. ACT supports business and common sense and roll on 14 October. We oppose this bill.

Thank you, Madam Speaker. It’s great to rise in support of the Employment Relations (Restraint of Trade) Amendment Bill. Just to mention some of the comments that Mr Baillie made, he said that the bill is, if challenged in the courts, unenforceable, then he comes back and he says the new bill is unnecessary, it’s not going to doing anything—a bit controversial there.

The restraint of trade in an employment agreement is a provision that stops an employee from working in their field, in their area, for a competitor after their employment has ended. In some jurisdictions, this restraint of trade is known as a non-compete clause. Just for context, the competition is where an employee is prevented from working in a similar field to their former employer’s business. Non-solicitation is where a former employee is allowed to pick another job in the same industry but is restricted from contacting their former employer’s clients about their new businesses. This is unjust, it’s unfair, and it needs to go.

This is what this bill is all about: it seeks to amend the Employment Relations Act 2000 to include a restraint of trade provision that will prohibit the use of restraints of trade in employment agreements for lower to middle income employees. For me, this is the heart of this bill. This bill defines “restraint of trade” broadly to include both non-competition clauses and non-solicitation clauses.

The reality is restraints are usually made by people at the beginning of an employment relationship, before they have an idea what they’re signing up to, which could turn out to be a nightmare. They sign whatever is put in front of them, because they need to earn a living, they need a job—they’re desperate. This ends up disadvantaging them.

It’s hard to measure the true impact of this rule or this law in New Zealand due to the lack of data, but we know many employees on a modest income choose to stay in low-paid work in order to abide by the restraint. This in turn depresses the wages and thieves innovation.

To me, Labour is all about protecting workers’ rights, and Labour will always make sure that workers get a fair deal by strengthening employment laws. This bill is part of the broader strategy to stand up for workers, unlike the other side—it’s always about business. Actually, some of the things that you’re arguing conceptually disadvantages businesses—[Interruption]

ASSISTANT SPEAKER (Hon Jacqui Dean): Calm it down! Order!

It is in in the public interest that lower-paid employees should be free to take a job whenever they want, however they see it, and without any restriction.

I want to commend Helen White for bringing this tonight. A lot of working people will be looking up and will be saying, “Thank you, Helen, for bringing this, for doing this.”, because this is going to mean a lot for a lot of employees—

💬 Hon Member: Are you talking to the House?

—and it’s going to change—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! The member is addressing the House through the Chair.

Sorry, Madam Speaker. In a nutshell, this is a good bill. I commend it to the House.

I’m pleased to take a call on the Employment Relations (Restraint of Trade) Amendment Bill, and we want to commend the member Helen White for having this bill be read. It’s always interesting to see a majority Government taking this very important and substantive piece of legislation via a member’s bill, particularly when we were having a discussion about the purpose of a member’s bill and whether they should be narrow or broad. But I actually am a believer that there is scope to do substantive change in legislation and to our system via members’ bills, and restraints of trade is an area that is well overdue for us to address.

It’s been really interesting to hear members throughout the debate—particularly from the ACT Party—portraying their relationship between the employers and the workers as an even playing field when we know that it is not and that that is inherently, simply not the case. Restraints of trade are becoming more common in Aotearoa. Despite what people may have believed, which is that it’s the kind of thing that is left to CEOs, it’s increasingly more commonly used for lower-waged workers and for people in the gig industry, and many people in Aotearoa will be familiar with the case of Tova O’Brien, who actually went through a very—

💬 Hon Member: Oh, poor old Tova—poor old Tova!

RICARDO MENÉNDEZ MARCH: OK, but it helped illustrate the problematic element that restraints of trade actually can have for people and the impact that it has on their employment.

Do you know what? Independent from the National Party’s views—who seem to be bemoaning me mentioning her name—it is an example of the impact it can have on people, and in Aotearoa there are some cases. The member who is sponsoring this bill mentioned an example of a barista from Fuel Espresso who was under some pretty ridiculous restraint of trade conditions. He’d been required to work for an outlet more than 100 metres away from the one where he’d quit his employment.

But these kinds of things apply to hairdressers, to airline workers, and the impact that it has is that if you leave your employment, unless you go to another trade, you end up either having to then go into receiving income support, which we know actually for many is way below the poverty line—so it sets people up to actually fail in terms of them having a good safety net, or it forces them into another trade. So restraints of trade serve no one but controlling employers who seek to have more power over workers, and while there isn’t heaps of local academic research on the impacts of the restraints of trade applications here in Aotearoa, we have overseas examples in the US, where it is increasingly more used in the gig industry.

It was really interesting, again, to see the National Party talking about how this bill was going to lead to the brain drain to Australia, while not acknowledging that, actually, Australia has a more unionised workforce. It has higher taxes for high-income earners and a tax-free threshold—which, I mean, we support, and we’re actually kind of into that.

So I think that the idea of portraying this bill as risking people leaving to go to Australia is a dog whistle, and it shows the colours of the parties of the right, which is to side with employers and never take the side of the workers, who actually are the backbone of our economy. The employers are nothing without the workers who are there in their businesses, providing the labour for them, and it’s not even—

💬 Hon Member: Oh, good on you, “Karl Marx”.

RICARDO MENÉNDEZ MARCH: Actually, yeah, it is a socialist statement, but it is also simply a fact.

So we welcome this bill. We welcome the opportunity to have workers who have experienced restraints of trade submit at a select committee stage, and I actually foresee that we’re going to have some really interesting submissions from workers themselves. Unlike what the National Party alludes, we’re going to have a wave of employers talking against this. We’re probably going to shine a light on the state of restraint of trade practices in Aotearoa, and that will help inform this process to ensure that whatever comes out of it is fit for purpose to protect our workers—to protect the backbone of our economy. Kia ora.

Thank you, Madam Speaker. It is a great privilege to rise and take a call on the Employment Relations (Restraint of Trade) Amendment bill. Good day at the office, thank you, Helen White. It’s really great to be here in support of this bill. We’ve heard a lot of “Chicken Little-ing” tonight; it’s happened before. People are terrified about what this bill means and what it doesn’t mean. It’s obvious that not everybody has read the entire bill because they’re scared of things that are clearly not going to happen when you read the bill properly.

At the moment, because of restraint of trade, it isn’t, you know—the argument that we’ve got legitimate propriety interests, and you can see it, you know, trade secrets, all that sort of thing. Well, there is an opportunity and this bill protects confidentiality and fidelity. I think it is a real stretch to argue that someone who has been taught how to make a coffee—a good one or a bad one—should be punished and unable to shift jobs, the reason being because you’re trying to legitimately protect your proprietary interests. I think that is too much of a stretch.

The real impact is, as we’ve already heard, that it depresses wages and stifles innovation because people can’t negotiate for better pay and conditions, and they can’t move on. The interesting thing is this is about—we’ve had a bit of market failure with this and with the way things are operating at the moment. This is actually about restoring some balance to the market. This is about making it possible for someone to go, “I’ve got something to sell, I’m a fantastic barista, and I think that I should be getting paid more, or maybe have better working conditions, or work in an innovative business. I’d really like to go and work for that business,” because we have ambitious business owners in this country, who don’t need to compete on low wages. They want to be able to compete because they’re innovative and they’re successful, and they invest in value—their most precious resource which is their workers. The problem with those businesses is they can’t compete because they can’t attract those workers to a much better business, because of the restraint of trade of those workers being able to move on.

We talk about agility. Well, stopping somebody from going to a better workplace because you’ve got a fantastic potential employer, that’s not agility. That is dampening the opportunity for innovation and to improve productivity. Anyone who has run a business, or been involved in an enterprise, especially a small enterprise, knows that we have to be agile and creative and we have to make the most of our precious employees—not exploit them, but make the most of them.

I grew up in a hairdressing salon, and I have discussed this with my mother, who was a fabulous employer. She employed a lot of apprentices around New Plymouth over the years, and we discussed the restraint of trade, which is common practice for most hairdressers—the idea being that if you leave a salon that your clients may want to follow you. That’s an interesting challenge. But my mum said actually the time when her staff might have wanted to leave wasn’t because she was a poor employer, because she was a fabulous employer. She trained her staff really well and she looked after them. The problem was maybe there wasn’t a great fit between the culture of her salon—we know what salons are like, they’re incredibly vibrant and most salons are quite different from each other. She might have had a staff member who wanted to go and work in another salon, and she’d say, “Good luck to you.”

So, actually, what it does when you’ve got staff who can move freely with their skills, it ups the game of the employer, “How do I make sure that I keep these people I’ve invested in?” Restoring some power to a well-trained worker actually improves productivity. It makes sure that you are more likely to retain your workers, not lose them—weirdly enough. I know it seems counterintuitive. But if you can look after your workers because you fear losing them to someone who’s going to offer them a better job, actually, that’s going to help with your productivity.

It is a sensible bill. It isn’t outrageous. Employers will find that this is actually something that will help them lift their game. It’s going to help us look after our workers. It is because of this that I commend the bill to the House.

The question is that the motion be agreed to.

Kia ora e te Mana Whakawā. It’s a huge honour and privilege to speak for the fourth time in this House today, especially in this Employment Relations (Restraint of Trade) Amendment Bill. I want to acknowledge Helen White; often, in this House, we acknowledge people bringing in their lived experience of this House, and we are fortunate that Helen, an employment lawyer, has brought her experience to this House. And as she had said in her opening remarks, this is the “why”; this is why that she came into Parliament, just to sort out this unfairness. We also heard from Camilla Belich, who is also an employment lawyer, who also commends this bill to the House. The reason why I say that is because we are hearing from people who used to live this day in and day out, and when they say, “This is not fair”, I tend to believe them, as they’re experts in that area.

So we understand and we remember that Helen White had brought this to the House in 2022. What I take from it is that we’ve heard today what a restraint is that an employer—it’s in the name of the bill, “restraint of trade”. We’ve heard from people on both sides of the House; all throughout the House, talking about the restraint of trade in an employment agreement. And we’ve heard from Helen White herself that when people sign these contracts, sometimes they don’t get to that fine print. We’ve all experienced when we’re too excited about receiving something, that we just sign the contract and we forget to read the fine print.

Helen White said that this bill prohibits the use of restraints of trade and employment agreement for lower and middle income employees. So what this bill does is that it provides that the restraints of trade that have no effect wherever an employee earns less than three times the minimum wage. I’d just like to remind the House that we increased the minimum wage and we’re now at $22.70. So if you earn less than $68.10, this bill will apply to you. So it’s talking about protecting low and middle income earners. We’ve heard from the Green member who used the example of Tova O’Brien—who probably earns more than $68.10 an hour. We heard that it does work. However, this bill focuses on lower and middle income earners earning less than $68.10 an hour.

What the bill also does is it limits the duration of restraints of trade to no more than six months—no more than six months. I think that’s really fair, because at the moment the current Employment Relations Act is silent on that; there is no income threshold on the current law. So that’s what this will change. It also requires the employers to pay the employees who are subject to the restraint of the trade provision an amount equal to half of the employee’s weekly earnings during the duration of restraint—I think that’s fair. It is fair to provide an opportunity, to provide an income for someone who has chosen to go and work for another employer. We want everyone to have an opportunity to upskill, and if there’s no opportunity for growth, we’re giving opportunity for lower and middle income earners to look elsewhere, and whilst they’re in that restraint period, it’s only fair that the employer contributes to that period of restraint. So that’s where it says that it requires employers to pay employees who are subject to a restraint of trade provision, an amount equal to half the employee’s weekly earnings.

This continues the Government’s work on a fair day’s work for a fair day’s pay. We have increased the minimum wage since we came into Government in 2017. Currently, the minimum wage is $22.70, and the living wage is currently $23.65 per hour: we are working away there. We are the party for the workers. We’ve got the experts on this side telling us that this is fair. Through their experience, I agree with them, and I commend this bill to the House. Mālō.

Well, thank you very much, Madam Speaker. I firstly want to acknowledge the member Helen White from Mt Albert for her bill on the Table this evening. Helen and I are class members of 2020—I have a high degree of respect for her, a new member, and it is a shame, obviously, with a member that’s going to be in this House for many years, no doubt, with a seat like Mt Albert, that we’ve got a bill such as the Employment Relations (Restraint of Trade) Amendment Bill in her name, which, obviously, we will not be supporting.

Isn’t it interesting: did anyone hear the quote before that the reason we have Silicon Valley in the United States of America is because they don’t have restraint of trade clauses in their contracts? Have you ever heard anything more ridiculous than a comment like that? A little history lesson: Silicon Valley started in 1955. The three reasons why we have Silicon Valley are not because they don’t have restraint of trade agreements in their contract; it has a little bit to do with Government research and development in defence, a little bit to do with venture capital—and I know that scares a number of members on the other side of the House. Venture capital—don’t worry; it’s OK—and another aspect as well, which was that they had a number of universities. I didn’t see, in my in-depth research this evening, that restraint of trade was the reason for Silicon Valley, but that is one of the things that the member stated in her opening address this evening. But for those at home going, “Crikey, if this is our pathway to economic success and growth in this country, all we need to do to grow our economy is through restraint of trade clauses.”, I’m sorry, we’re going to let you down this evening. It isn’t the pathway to prosperity. The only pathway, Madam Speaker, as you know, is two ticks blue on 14 October. That’s right—that is right.

So let’s talk about restraint of trade clauses, right? Because they’re not all bad. The other side of the House have been painting this picture of, like, they are the most evil cause that you could ever have in a contract. Well, guess what! In order to have a legal contract, an employee and an employer need to agree to have that clause in the contract. It’s called personal responsibility. I know on that side of the House, they hate that word. They hate the concept of personal responsibility. But at the end of the day, the fact is, if those two individuals agree, shake hands, and sign an employment contract, they can have one of these clauses, OK? So it’s not illegal. If they agree, it’s OK.

They are there to prevent an employee from setting up a similar business that may affect their employer. Is that genuinely unreasonable? You get a job. OK—we heard about Starbucks a lot this evening. Starbucks, you know, a good global corporate, doing a lot of work and all that. But if they employ someone and they teach them how to make coffee—and that’s an art, I agree with that—isn’t it reasonable that they don’t just quit after they’ve learnt how to make coffee and set up a coffee shop right next door? I mean, you know, they’ve sort of invested in that individual in that, so I don’t think it’s unreasonable. But tell you what: how many times has Starbucks actually taken employment action against a barista for making coffee and leaving early? Never. Never in this country, I think.

So this whole fallacy—“Oh, we can’t back it up with any data. There’s no data. It sort of feels like this might be a good idea.”, and the Greens going, “Well, it feels like it’s a good idea.”—that doesn’t cut it, does it? We’re not in the business of doing legislation in this House because it feels like a good idea, are we? No, we’re not. But that is what we’ve got in this country—a Government that puts bills in front of this House because it feels like the right thing to do. Well, I tell you what: I feel like I’ve had enough of this Government. I feel like, for this Government, it is time to go. I’m sick of this Government, and I’m not the only one. I think the majority of Kiwis are sick of this Government as well.

So if you haven’t guessed where we stand on this bill, I’ll tell you what: we are opposing this bill. Helen, no disrespect. Helen White: great member for Mt Albert, but this bill is not going to cut it this evening. We will be opposing this bill. We wish it all the very best for its passage through to the future, but I can tell you what: under a National-led Government this isn’t going to last 10 seconds. It’s all over. It’s all done. No more on this bill. We’re finished this evening. Thank you very much, Madam Speaker.

Thank you, Madam Speaker. As a business owner, I find it intriguing that there is an Opposition who thinks it is reasonable to not be able to attract good, experienced people to your business because a competing business has a restraint of trade on workers who are earning less than $120,000—where we have workers who are earning the minimum wage, all the way through—and are unable to be attracted to a job because another business won’t let them go. To me, that is unreasonable. I find it insulting that the Opposition members think it’s laughable.

So the reason that I think we will see this bill proceed with such strength is that when we come to listening to submissions through this bill process, we are going to hear some absolutely fascinating stories about where businesses have constrained people from working; where a business can employ someone for three months, let them go, and they can’t go and do that same job for somebody else for six months. What is reasonable and fair about that?

So the Opposition talk about business, but they don’t talk about growing business. They don’t talk about how people learn and develop and upskill and go from job to job and keep growing. They don’t talk about how businesses need to be able to attract staff. If you are a good employer, you can retain staff. But you are also a good employer when you let staff go to jobs that they might want to go to—you should not hold them forever. Actually, people advance through their careers when they are able to get new jobs. Sometimes those people actually come back after they’ve gained skills somewhere else. It’s those sort of things that we can do to actually improve career development; where we can do more for helping and supporting competition, which is great for business.

But when I listened to the member who brought this bill, Helen White, and when I talked to her about it today, I learnt so much more from her experience in dealing with clients who are in these situations. To think that a qualified early childhood education teacher is working for one company and she cannot—or he cannot—then go on to work for another company for six months. What’s good about that? It’s not about growing the business that’s trying to hold the person back. It’s about growing the person in a thriving way for a career that will, in turn, educate and grow the growing young minds of our nation.

There is nothing wrong with competition. There is everything right in being able to support people to grow and develop in their career pathways. That reason is why I, as a business owner, will take absolute interest in this bill and, also, hearing from other businesses and other employees who have experienced this. I’m sure we will hear from those businesses that want to be able to protect confidentiality. Absolutely, this bill still will protect confidentiality. But what it will do is enable people on lower wages to advance and not be inhibited from an employer they leave. With that, I commend this bill to the House. Thank you, Madam Speaker.

It’s been a real pleasure to listen to the contributions made by colleagues from all sides of this House, but I would like to start by addressing the challenge to my assertion that this was something that was actually in the interests of business and of productivity. This is a subject I care about, so I appreciate that not everybody has gone away and done the research, but I want to draw your attention to an article that talks about the situation in California. This is an article that comes from, I think, the Financial Times. It says: “In the early days of the computer industry, Silicon Valley was rivalled by the Route 128 corridor”—this is the road through the Boston suburbs, in Massachusetts—“as a hub of innovation.” But California won out decisively here, and many people think the lack of non-compete agreements in the “Golden State” is part of the reason. To see why, think about why Mark Zuckerberg moved Facebook to the Bay Area when he decided to get serious about it. He and his investors believed in the Facebook promise. They thought it was possible that it would become a huge, super-successful company. For that to happen, you need the ability to literally grow the enterprise at rapid clip, hiring lots of technology workers, hiring lawyers who are familiar with the tech legal issues, hiring HR people who are used to dealing with computer people. That is actually the way Silicon Valley grew, and California has one of the most liberal restraints. It takes away most of the ways that you can cut a non-competition clause. And business thrives as a result.

So I ask you, and I ask all the people who look at this, to consider this and to actually think about it really seriously, because we have a problem in New Zealand. We have a problem where our wages are too low and our productivity is sluggish. The way that we are going to move that is not by doing what we’ve been doing before; it’s about staying ahead. That’s why America is bringing in a ban across the entire United States which does, effectively, what I’m proposing here. So do you want to be after it, or do you want to be before it? And now tell me: which is the party that is actually looking after small and medium businesses? Which is the party that’s thinking into the future? Because we must—must—adapt. And I would like those who are interested in this area to make submissions. It’s going to be really important we hear your stories. I’ve heard them, because, when I announced that I was bringing in this bill, I heard from New Zealanders, and I was quite shocked by some of the stories I heard. It brought up related issues. It brought up things that I had not heard of. I had not seen the Starbucks agreement. This is an area where we need to hear from New Zealanders; we need to know your stories and make sure that the version of this bill that comes in after the select committee process is one that meets your needs—the needs of ordinary New Zealanders—but also meets the needs of business.

I appreciate there will be some fear around things like protection of client lists, but remember that this bill also protects confidential information. It also has reinforced the duty of fidelity. This is an attempt by me to write a law which will actually be right for New Zealanders and progress both wages and productivity. It will foster small businesses. It will foster medium businesses. What it won’t do is allow the monopoly of workers and the restriction of their capacity to move in their careers by large multinationals. That’s the truth of it, and that’s a very, very important truth.

So while I acknowledge Tova O’Brien for actually bringing an issue like this forward in her own case, even Tova knows that this law is not particularly about people as articulate and confident as Tova O’Brien; this is about people who are not. This is about the women of New Zealand who actually have been disadvantaged as a result of us neglecting this aspect of the law. This is about our baristas. This is about our mechanics. This is about New Zealand workers. Thank you.

The question is, That the

Motion agreed to.

Bill referred to the Education and Workforce Committee.