Experienced hairdresser Aleshia Dowler started her own salon, initially operating from her own home, but got hit with a restraint of trade injunction on 18 December 2023.
Local media picked up the story:
Scissors out as hairdresser told to shut over stoush with ex-boss | The Press (Mariné Lourens, 22 December 2023)
The person who successfully applied for the interim injunction was her former boss Anna McCormick-Wilson, trading as Tanglez Hair Studio in Ashburton, South Canterbury. Dowler had worked at McCormick-Wilson’s salon for a little over two years. The employment agreement had a clause restraining Dowler from working as a hairdresser within a 5km radius of the salon for 12 months.
We note that the population of Ashburton is around 35,000 and the geographic parameter of the restraint basically covered all of Ashburton. The nearest towns with a population large enough for Dowler’s startup to be viable are Timaru, 76km away, and Geraldine, 51km away. The travel costs would most likely be prohibitive.
We also note that while Peter van Keulen, Member of the Employment Relations Authority (ERA, similar to the UK’s Employment Tribunal), granted the injunction, he said:
[37] At the outset I note that a restriction period of 12 months from the end of employment is too long…
In a similar matter that we reported on last month, the ERA, or Employment Court, has the ability to “blue pencil” a restraint period down from one or two years to whatever the Member or Judge considers reasonable.
Fatberg buster enforces noncompete – 20 December 2023
The thing about hairdressers (as opposed to electricians, chefs and builders for example) is that customers are often more likely to be loyal to the tradesperson than the salon they work in, so if they’re good at their job, customers are likely to follow them when they quit. While this is the first noncompete dispute involving hairdresser we’ve seen before the ERA, we suspect that many other hairdressers have been bullied threatened with enforcement even when the restraint of trade clause overreaches in terms of geography or time, and simply comply out of fear.
Restraints of trade are generally against the public interest because:
They often function as a wage suppression tool (which in turn deprives Inland Revenue of extra income tax that it would have collected if the tradesperson had been able to jump ship to an employer that was prepared to pay more),
They are anticompetitive and deprive the consumer of choice,
They may deprive a business of the opportunity to hire an employee who is a good fit for the business, which stifles productivity. In some cases that could prevent new businesses from forming.
Member van Keulen’s determination noted:
[16] On 2 October 2023 Ms Dowler set up a Facebook page for her new business and then on 4 October 2023 she officially opened her hairdressing business, which operates from her home.
The determination did not mention Aleshia Dowler’s trading name, but it’s Stylez Hair Studio. We followed the Stylez Facebook page and a recent update indicates that Dowler found a workaround that would enable her to ply her trade until the employment dispute is resolved, and put food on the table. 7km from Ashburton/Tinwald is a picturesque new residential development called Lake Hood, home of Jax Hairdressing.
Whether she stays there or returns to Ashburton proper after the restraint falls away, we don’t know. But one thing we’re sure of is that many customers won’t mind driving 7km (as opposed to 1-2km) to see their favourite hairdresser.
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