The number nobody’s talking about
Everyone fixates on non-competes. But the standout figure in the OECD study published on 7 July 2026 is the non-solicitation rate. A striking 43% of New Zealand employees are ‘probably’ or ‘definitely’ covered by clauses stopping them contacting former clients, against a 15-country average of just 22%. New Zealand sits at the very top of the ranking.
The OECD surveyed 2,240 private sector employees and 406 firms in mid-2025, benchmarking us against Belgium, Britain, Canada, France, Germany, Japan and eight others. On non-competes New Zealand actually looks moderate, with 23% of employees covered against a 30% average, and 42% on NDAs versus a 55% average. It’s the client-relationship lock that makes us an outlier.
Sprayed across the workforce like duct tape
These clauses exist to protect genuine commercial interests. That’s not the problem. The problem is that they’re being applied indiscriminately. The OECD found that among firms using non-competes, 13% apply them to all employees regardless of role or seniority, rising to 40% for NDAs.
More telling: roughly 30% of employees with no access to confidential information, on low incomes, or in non-managerial roles believed they were bound by a non-compete. There is no commercial case for restraining a warehouse worker or a junior administrator from taking a better job. The OECD’s verdict is blunt: non-compete clauses have spread into parts of the labour market where the traditional justification appears weak or absent.
A moat for incumbents, a wall for challengers
This is where the productivity story bites. When 43% of workers can’t approach the clients they’ve spent years building relationships with, the practical effect is to freeze client books in place with whoever already holds them. A smaller firm or startup that hires an experienced professional discovers they’ve hired someone legally handcuffed from bringing any business with them.
That’s a structural advantage for scale players, and it compounds. The OECD’s April 2025 cross-country report stated plainly that the balance of evidence suggests these clauses suppress job mobility, firm entry, innovation, wages and productivity. For a country with a well-documented productivity problem, that’s not a footnote.
The timing makes it worse. With unemployment at 5.3% and underutilisation at 12.9% in March 2026, the labour market already has significant slack. Restraints that discourage workers from moving compound the mobility problem at exactly the wrong moment.
Employers are doubling down, not backing off
Here’s the twist. Rather than reading the room, employers are enforcing harder. In April 2025, Mauro Barsi, head of legal at the Employers and Manufacturers Association, told NBR he had seen as many restraint disputes in the prior 6-12 months as in the previous four years combined. Restraints are now among the most common issues in Employment Relations Authority and Employment Court judgments.
The irony is that many of these clauses wouldn’t survive a challenge. Under New Zealand law restraints bind only if reasonable and protecting a legitimate interest. The EMA’s own 2024 submission to Parliament conceded that the “do it yourself” culture of writing agreements causes clauses to become onerous and, if challenged, unenforceable. In other words, plenty of clauses in circulation are legally defective but practically effective, because most workers can’t afford to test them in court.
The reform vacuum
Parliament had a fix on the table. In 2022, Labour MP Helen White introduced a bill that would have voided restraints for employees earning less than three times the minimum wage and required employers to pay for the privilege of enforcing them. It passed first reading, then lapsed before the 2023 election. The current government has shown no appetite to revive it, and the EMA favours a voluntary code of practice over legislation.
Meanwhile the world is moving the other way. The US Federal Trade Commission moved to ban most non-competes in 2024, and only 22% of Australian workers were covered by non-competes in 2023. The OECD has now handed the government a data-rich case for reform. The question is whether anyone in Wellington is reading it, because right now New Zealand’s regulatory direction is pointed squarely at the past.
Sources
- OECD flags overuse of restraints of trade and NDAs in NZ, saying such clauses are hampering productivity (2026-07-07)
- Five facts on non-compete and related clauses in OECD countries (2025-04)
- EMA Submission to Education and Workforce Committee on the Employment Relations (Restraint of Trade) Amendment Bill (2024-07)
- How enforceable are restraints of trade? (2025-03-03)